EX-99 2 exhibit_a.htm EXHIBIT A
Exhibit A
 
Ceragon Networks Reports Second Quarter 2016 Financial Results
August 8, 2016
CERAGON NETWORKS REPORTS SECOND QUARTER 2016
FINANCIAL RESULTS

Strength in India and Latin America drove sequential improvement in bookings and
revenues during the second quarter
 
Little Falls, New Jersey, August 8, 2016 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wireless backhaul specialist today reported results for the second quarter which ended June 30, 2016.
 
Second Quarter 2016 Highlights:
 
Revenues - $70.0 million, down 26% from the second quarter of 2015, and up 17% from the first quarter of 2016.
 
Gross margin - 34.7%, compared to 28.2% in the second quarter of 2015 and 35.6% in the first quarter of 2016.
 
Operating income - $4.0 million, compared to $5.9 million in the second quarter of 2015, and $1.2 million in the first quarter of 2016.
 
Net income (loss) - net income of $0.1 million, or $0.00 per diluted share for the second quarter of 2016.  Net income for the second quarter of 2015 was $1.3 million, or $0.02 per diluted share. Net loss for the first quarter of 2016 was $(0.4) million or $(0.01) per diluted share.
 
Non-GAAP results - gross margin was 35.5%, operating profit was $4.9 million, and net income was $1.6 million, or $0.02 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached table.
 
Cash and cash equivalents - $34.4 million at June 30, 2016, compared to $41.8 million at March 31, 2016.
 
“As the rollout of 4G LTE networks transitions from developed to emerging markets, we are benefitting from the related demand for high-value, best-of-breed solutions, “said Ira Palti, president and CEO of Ceragon. “Our bookings and revenues grew sequentially, primarily due to strength from India and Latin America. We are profitable and cash flow positive, and we used a portion of our cash to continue paying down debt. Based on the increase in bookings in the second quarter and the pipeline of potential business, we continue to expect a gradual increase in revenues during the second half of 2016.”
 
Supplemental geographical breakdown of revenue for the second quarter of 2016:
 
· Europe:  15%
 
· Africa:  6%
 
· North America:  16%
 
· Latin America:  27%
 
· India:  26%
 
· APAC:  10%
 
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) 230-1059 or International: +1 (612) 234-9960, 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: 397184. A replay of both the call and the webcast will be available through September 8, 2016.

About Ceragon Networks Ltd.

Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless backhaul specialist. We help operators and other service providers worldwide increase operational efficiency and enhance end customers’ quality of experience with innovative wireless backhaul solutions. Our customers include wireless service providers, public safety organizations, government agencies and utility companies, which use our solutions to deliver 4G, mission-critical multimedia services and other applications at high reliability and speed. Ceragon’s unique multicore technology provides highly reliable, high-capacity 4G wireless backhaul with minimal use of spectrum, power and other resources. It enables increased productivity, as well as simple and quick network modernization. We deliver a range of professional services that ensure efficient network rollout and optimization to achieve the highest value for our customers. Our solutions are deployed by more than 460 service providers, as well as hundreds of private network owners, in more than 130 countries.

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.

- 2 -
This press release contains statements concerning Ceragon's future prospects that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on the current beliefs, expectations and assumptions of Ceragon's management. Examples of forward-looking statements include: revenues, growth prospects, projections of gross margins, operating and other expenses, capital expenditures, profitability and liquidity, competitive pressures, product development, financial resources, cost savings and other financial matters. You may identify these and other forward-looking statements by the use of words such as "may," "plans," "anticipates," "believes," "estimates," "targets," "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 the risk that Ceragon’s expectations regarding future revenues and profitability will not materialize; risks relating to the concentration of our business in India, Latin America, Africa and in developing nations in other regions, including political, economic and regulatory risks from doing business in those regions and nations, including but not limited to currency export controls and recent economic concerns; the risk that the amount of business coming from our most significant customers will go down or cease, the risk that Ceragon will not achieve the benefits it expects from its expense reduction plans and profit enhancement programs, as may be undertaken from time to time; the risk that Ceragon will not continue to comply with the financial or other covenants in its agreements with its lenders; the risk of significant expenses in connection with potential contingent tax liability; 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                          Claudia Gatlin
+972 3 5431 660 +1 212 830-9080
dorona@ceragon.com                                                    claudiag@ceragon.com

Media:
Tanya Solomon
+972 3 5431163
tanyas@ceragon.com
 
-tables follow-

- 3 -
 
Ceragon Reports Second Quarter 2016 Results
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
 
   
Three months ended
June 30,
    
Six months ended
June 30,
  
   
2016
    
2015
    
2016
    
2015
  
                         
Revenues
  
$
70,010
    
$
94,772
    
$
129,844
    
$
188,425
  
Cost of revenues
    
45,720
      
68,078
      
84,263
      
137,491
  
                                 
Gross profit
    
24,290
      
26,694
      
45,581
      
50,934
  
                                 
Operating expenses:
                                
Research and development
    
5,355
      
5,770
      
10,638
      
12,169
  
Selling and marketing
    
9,716
      
9,481
      
19,573
      
20,789
  
    General and administrative
    
5,192
      
5,525
      
10,110
      
10,261
  
    Restructuring costs    
- 
      
- 
      
- 
      
1,225 
  
                                 
Total operating expenses
  
$
20,263
    
$
20,776
    
$
40,321
    
$
44,444
  
                                 
Operating income
    
4,027
      
5,918
      
5,260
      
6,490
  
                                 
Financial expenses, net
    
2,372
      
3,161
      
3,290
      
9,507
  
                                 
Income (loss) before taxes
    
1,655
      
2,757
      
1,970
      
(3,017
)
                                 
Taxes on income
    
1,606
      
1,426
      
2,357
      
2,647
  
                                 
Net income (loss)
  
$
49
    
$
1,331
    
$
(387
)
  
$
(5,664
)
                                 
Basic net income (loss) per share
  
$
0.00
    
$
0.02
    
$
0.00
    
$
(0.07
)
                                 
Diluted net income (loss) per share
  
$
0.00
    
$
0.02
    
$
0.00
    
$
(0.07
)
                                 
Weighted average number of shares used in computing basic net income (loss) per share
    
77,674,747
      
77,170,030
      
77,664,815
      
77,158,982
  
                                 
Weighted average number of shares used in computing diluted net income (loss) per share
    
77,919,559
      
77,243,249
      
77,664,815
      
77,158,982
  

- 4 -
 
Ceragon Reports Second Quarter 2016 Results
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)

   
June 30,
2016
    
December 31,
2015
  
ASSETS
  
Unaudited
    
Audited
  
             
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
34,377
    
$
36,318
  
Short-term bank deposits
    
153
      
-
  
Trade receivables, net
    
89,451
      
116,683
  
Other accounts receivable and prepaid expenses
    
20,351
      
22,583
  
Deferred taxes, net
    
524
      
1,633
  
Inventories
    
48,786
      
49,690
  
Total current assets
    
193,642
      
226,907
  
                 
NON-CURRENT ASSETS:
                
   Deferred tax assets, net
    
93
      
189
  
   Severance pay and pension fund
    
4,287
      
4,681
  
   Property and equipment, net
    
26,972
      
28,906
  
Intangible assets, net
    
2,374
      
3,192
  
   Other non-current assets
    
2,901
      
1,457
  
Total non-current assets
    
36,627
      
38,425
  
Total assets
  
$
230,269
    
$
265,332
  
                 
     LIABILITIES AND SHAREHOLDERS' EQUITY
                
                 
 CURRENT LIABILITIES:
                
Short term loan, including current maturities of long term loan
  
$
21,450
    
$
34,922
  
Trade payables
    
56,154
      
71,721
  
Deferred revenues
    
3,966
      
8,901
  
Other accounts payable and accrued expenses
    
23,750
      
27,052
  
Total current liabilities
    
105,320
      
142,596
  
                 
  LONG-TERM LIABILITIES:
                
Accrued severance pay and pension
    
8,774
      
9,276
  
Other long term payables
    
12,127
      
10,639
  
Total long-term liabilities
    
20,901
      
19,915
  
                 
 SHAREHOLDERS' EQUITY:
                
Share capital:
                
Ordinary shares
    
214
      
214
  
     Additional paid-in capital
    
408,773
      
408,174
  
Treasury shares at cost
    
(20,091
)
    
(20,091
)
Other comprehensive loss
    
(7,601
)
    
(8,616
)
Accumulated deficits
    
(277,247
)
    
(276,860
)
                 
Total shareholders' equity
    
104,048
      
102,821
  
                 
Total liabilities and shareholders' equity
  
$
230,269
    
$
265,332
  
 
- 5 -
Ceragon Reports Second Quarter 2016 Results
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)
 
   
Three months ended
June 30,
    
Six months ended
June 30,
  
   
2016
    
2015
    
2016
    
2015
  
Cash flow from operating activities:
                        
Net income (loss)
  
$
49
    
$
1,331
    
$
(387
)
  
$
(5,664
)
Adjustments to reconcile net loss to net cash used in operating activities:
                                
                                 
Depreciation and amortization
    
2,668
      
2,719
      
4,976
      
6,222
  
Stock-based compensation expense
    
181
      
378
      
592
      
572
  
Decrease (increase) in trade and other receivables, net
    
(3,875
)
    
4,487
      
30,503
      
19,356
  
Decrease in inventory, net of write off
    
1,171
      
4,539
      
1,603
      
9,648
  
Decrease in deferred tax asset, net
    
972
      
723
      
1,205
      
1,453
  
 Increase (decrease) in trade payables and accrued liabilities
    
1,616
      
(11,612
)
    
(18,445
)
    
(25,331
)
Increase (decrease) in deferred revenues
    
(267
)
    
1,049
      
(4,934
)
    
(4,428
)
Other adjustments
    
(218
)
    
(83
)
    
(108
)
    
(189
)
Net cash provided by operating activities
  
$
2,297
    
$
3,531
    
$
15,005
    
$
1,639
  
                                 
Cash flow from investing activities:
                                
 Purchase of property and equipment
    
(1,407
)
    
(1,431
)
    
(3,608
)
    
(3,473
)
Investment in short-term bank deposits
    
(120
)
    
(4
)
    
(153
)
    
(4
)
Proceeds from short-term bank deposits
    
-
      
-
      
-
      
64
  
 Proceeds from sale and maturities of   marketable securities, net
    
-
      
-
      
-
      
122
  
Net cash used in investing activities
  
$
(1,527
)
  
$
(1,435
)
  
$
(3,761
)
  
$
(3,291
)
                                 
Cash flow from financing activities:
                                
Proceeds from share options exercise
    
7
      
-
      
7
      
-
  
Proceeds from bank loans
    
-
      
2,150
      
-
      
4,200
  
Repayment of bank loans
    
(8,400
)
    
(2,058
)
    
(13,472
)
    
(4,116
)
Net cash provided by (used in) financing activities
  
$
(8,393
)
  
$
92
    
$
(13,465
)
  
$
84
  
                                 
Translation adjustments on cash and cash equivalents
  
$
155
    
$
77
    
$
280
    
$
(320
)
Increase (decrease) in cash and cash equivalents
  
$
(7,468
)
  
$
2,265
    
$
(1,941
)
  
$
(1,888
)
Cash and cash equivalents at the beginning of the period
    
41,845
      
37,270
      
36,318
      
41,423
  
Cash and cash equivalents at the end of the period
  
$
34,377
    
$
39,535
    
$
34,377
    
$
39,535
  
                                 

- 6 -
Ceragon Reports Second Quarter 2016 Results
 
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)
                         
   
Three months ended
    
Six months ended
  
   
June 30,
    
June 30,
  
   
2016
    
2015
    
2016
    
2015
  
                         
GAAP cost of revenues
  
$
45,720
    
$
68,078
    
$
84,263
    
$
137,491
  
Amortization of intangible assets
    
(307
)
    
(306
)
    
(613
)
    
(609
)
Stock based compensation expenses
    
(3
)
    
21
      
(21
)
    
(10
)
Changes in pre-acquisition indirect tax positions
    
(269
)
    
(118
)
    
(403
)
    
(148
)
Non-GAAP cost of revenues
  
$
45,141
    
$
67,675
    
$
83,226
    
$
136,724
  
                                 
GAAP gross profit
  
$
24,290
    
$
26,694
    
$
45,581
    
$
50,934
  
Gross profit adjustments
    
579
      
403
      
1,037
      
767
  
Non-GAAP gross profit
  
$
24,869
    
$
27,097
    
$
46,618
    
$
51,701
  
                                 
GAAP Research and development expenses
  
$
5,355
    
$
5,770
    
$
10,638
    
$
12,169
  
Stock based compensation expenses
    
2
      
(245
)
    
(126
)
    
(341
)
Non-GAAP Research and development expenses
  
$
5,357
    
$
5,525
    
$
10,512
    
$
11,828
  
                                 
GAAP Sales and Marketing expenses
  
$
9,716
    
$
9,481
    
$
19,573
    
$
20,789
  
Amortization of intangible assets
    
(107
)
    
(20
)
    
(206
)
    
(209
)
Stock based compensation expenses
    
(87
)
    
(130
)
    
(219
)
    
(213
)
Non-GAAP Sales and Marketing expenses
  
$
9,522
    
$
9,331
    
$
19,148
    
$
20,367
  
                                 
GAAP General and Administrative expenses
  
$
5,192
    
$
5,525
    
$
10,110
    
$
10,261
  
Stock based compensation expenses
    
(92
)
    
(24
)
    
(225
)
    
(8
)
Non-GAAP General and Administrative expenses
  
$
5,100
    
$
5,501
    
$
9,885
    
$
10,253
  
                                 
GAAP financial expenses
  
$
2,372
    
$
3,161
    
$
3,290
    
$
9,507
  
Currency devaluation in Venezuela related expenses
    
-
      
-
      
907
      
(2,973
)
Non-GAAP financial expenses
  
$
2,372
    
$
3,161
    
$
4,197
    
$
6,534
  
                                 
GAAP taxes on income
  
$
1,606
    
$
1,426
    
$
2,357
    
$
2,647
  
Changes in pre-acquisition tax liability
    
(453
)
    
-
      
(453
)
    
-
  
Other non-cash tax adjustments
    
(242
)
    
(856
)
    
(488
)
    
(1,590
)
Non-GAAP taxes on income
  
$
911
    
$
570
    
$
1,416
    
$
1,057
  
                                 
 
- 7-

Ceragon Reports Second Quarter 2016 Results
 
 
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
      
 
(U.S. dollars in thousands, except share and per share data)
      
 
(Unaudited)
      
 
   
Three months ended
June 30,
    
Six months ended
June 30,
  
   
2016
    
2015
    
2016
    
2015
  
                         
GAAP net income (loss) 
  
$
49
    
$
1,331
    
$
(387
)
  
$
(5,664
)
Amortization of intangible assets
    
414
      
326
      
819
      
818
  
Stock based compensation expenses
    
180
      
378
      
591
      
572
  
Restructuring expenses
    
-
      
-
      
-
      
1,225
  
Changes in pre-acquisition tax exposures
    
723
      
118
      
856
      
148
  
Currency devaluation in Venezuela related expenses
    
-
      
-
      
(907
)
    
2,973
  
Non-cash tax adjustments
    
242
      
856
      
488
      
1,590
  
Non-GAAP net income 
  
$
1,608
    
$
3,009
    
$
1,460
    
$
1,662
  
                                 
GAAP basic and diluted net income (loss) per share
  
$
0.00
    
$
0.02
    
$
0.00
    
$
(0.07
)
                                 
Non-GAAP basic and diluted net income (loss) per share
  
$
0.02
    
$
0.04
    
$
0.02
    
$
0.02
  
                                 
Weighted average number of shares used in computing
 GAAP basic net income (loss) per share
    
77,674,747
      
77,170,030
      
77,664,815
      
77,158,982
  
                                 
Weighted average number of shares used in computing
 GAAP diluted net income (loss) per share
    
77,919,559
      
77,243,249
      
77,664,815
      
77,158,982
  
                                 
Weighted average number of shares used in computing
 Non-GAAP basic and diluted net income per share
    
78,525,583
      
77,811,594
      
78,133,900
      
77,796,494
  
 
- 8 -