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Note | December 31, 2022 | June 30, 2023 | ||||||||||
Unaudited | ||||||||||||
ASSETS | ||||||||||||
CURRENT ASSETS: | ||||||||||||
Cash and cash equivalents | $ | 22,948 | $ | 24,529 | ||||||||
Trade receivables (net of allowance for credit losses of $22,410 and $22,961 at December 31, 2022 and June 30, 2023 (unaudited), respectively) | 100,034 | 107,592 | ||||||||||
Other accounts receivable and prepaid expenses | 15,756 | 15,813 | ||||||||||
Inventories | 3 | 72,009 | 67,836 | |||||||||
Total current assets | 210,747 | 215,770 | ||||||||||
NON-CURRENT ASSETS: | ||||||||||||
Severance pay and pension fund | 4,633 | 4,705 | ||||||||||
Property and equipment, net | 29,456 | 30,494 | ||||||||||
Operating lease right-of-use assets | 17,962 | 16,724 | ||||||||||
Intangible assets, net | 8,208 | 9,027 | ||||||||||
Other non-current assets | 18,312 | 17,744 | ||||||||||
Total non-current assets | 78,571 | 78,694 | ||||||||||
Total assets | $ | 289,318 | $ | 294,464 |
Note | December 31, 2022 | June 30, 2023 | ||||||||||
Unaudited | ||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
CURRENT LIABILITIES: | ||||||||||||
Trade payables | $ | 67,384 | $ | 62,769 | ||||||||
Deferred revenues | 3,343 | 3,104 | ||||||||||
Short-term loans | 37,500 | 39,550 | ||||||||||
Operating lease liabilities | 3,745 | 3,246 | ||||||||||
Other accounts payable and accrued expenses | 20,864 | 23,565 | ||||||||||
Total current liabilities | 132,836 | 132,234 | ||||||||||
LONG-TERM LIABILITIES: | ||||||||||||
Accrued severance pay and pensions | 9,314 | 9,054 | ||||||||||
Deferred revenues | 11,545 | 12,170 | ||||||||||
Operating lease liabilities | 13,187 | 11,827 | ||||||||||
Other long-term payables | 2,653 | 2,797 | ||||||||||
Total long-term liabilities | 36,699 | 35,848 | ||||||||||
COMMITMENTS AND CONTINGENT LIABILITIES | 6 | |||||||||||
SHAREHOLDERS' EQUITY: | 7 | |||||||||||
Share capital: | ||||||||||||
Ordinary shares of NIS 0.01 par value – Authorized: 120,000,000 shares at December 31, 2022 and June 30, 2023 (unaudited); Issued: 87,834,902 and 87,873,775 shares at December 31, 2022 and June 30, 2023 (unaudited), respectively; Outstanding: 84,353,681 and 84,392,252 shares at December 31, 2022 and June 30, 2023 (unaudited), respectively | 224 | 224 | ||||||||||
Additional paid-in capital | 432,214 | 434,221 | ||||||||||
Treasury shares at cost – 3,481,523 ordinary shares as of December 31, 2022 and June 30, 2023 (unaudited). | (20,091 | ) | (20,091 | ) | ||||||||
Accumulated other comprehensive loss | (11,156 | ) | (10,620 | ) | ||||||||
Accumulated deficit | (281,408 | ) | (277,352 | ) | ||||||||
Total shareholders' equity | 119,783 | 126,382 | ||||||||||
Total liabilities and shareholders' equity | $ | 289,318 | $ | 294,464 |
Six months ended June 30, | ||||||||
2022 | 2023 | |||||||
Unaudited | ||||||||
Revenues | $ | 140,993 | $ | 169,560 | ||||
Cost of revenues | 100,250 | 111,028 | ||||||
Gross profit | 40,743 | 58,532 | ||||||
Operating expenses: | ||||||||
Research and development, net | 14,292 | 15,750 | ||||||
Sales and Marketing | 18,134 | 19,974 | ||||||
General and administrative | 9,898 | 11,542 | ||||||
Restructuring and related charges | - | 897 | ||||||
Total operating expenses | 42,324 | 48,163 | ||||||
Operating income (loss) | (1,581 | ) | 10,369 | |||||
Financial expenses and others, net | 1,516 | 3,344 | ||||||
Income (loss) before taxes | (3,097 | ) | 7,025 | |||||
Taxes on income | 711 | 2,969 | ||||||
Net income (loss) | $ | (3,808 | ) | $ | 4,056 | |||
Basic net income (loss) per share | $ | (0.05 | ) | $ | 0.05 | |||
Diluted net income (loss) per share | $ | (0.05 | ) | $ | 0.05 | |||
Weighted average number of shares used in computing basic net income (loss) per share | 83,989,766 | 84,359,762 | ||||||
Weighted average number of shares used in computing diluted net income (loss) per share | 83,989,766 | 85,152,634 |
Six months ended June 30, | ||||||||
2022 | 2023 | |||||||
Unaudited | ||||||||
Net income (loss) | $ | (3,808 | ) | $ | 4,056 | |||
Other comprehensive loss: | ||||||||
Change in foreign currency translation adjustment | 444 | 908 | ||||||
Cash flow hedges: | ||||||||
Change in net unrealized losses | (3,655 | ) | (1,889 | ) | ||||
Amounts reclassified into net income (loss) | 293 | 1,517 | ||||||
Net change | (3,362 | ) | (372 | ) | ||||
Other comprehensive income (loss), net | (2,918 | ) | 536 | |||||
Total of comprehensive income (loss) | $ | (6,726 | ) | $ | 4,592 |
Ordinary shares | Share capital | Additional paid-in capital | Treasury shares at cost | Accumulated other comprehensive loss | Accumulated deficit | Total shareholders' equity | ||||||||||||||||||||||
Balance as of January 1, 2022 | 83,931,596 | $ | 224 | $ | 428,244 | $ | (20,091 | ) | $ | (9,507 | ) | $ | (261,719 | ) | $ | 137,151 | ||||||||||||
Exercise of options and vesting of RSUs | 100,534 | * | ) | 113 | - | - | - | 113 | ||||||||||||||||||||
Share-based compensation | - | - | 1,435 | - | - | - | 1,435 | |||||||||||||||||||||
Other comprehensive loss, net | - | - | - | - | (2,918 | ) | - | (2,918 | ) | |||||||||||||||||||
Net loss | - | - | - | - | - | (3,808 | ) | (3,808 | ) | |||||||||||||||||||
Balance as of June 30, 2022 (Unaudited) | 84,032,130 | $ | 224 | $ | 429,792 | $ | (20,091 | ) | $ | (12,425 | ) | $ | (265,527 | ) | $ | 131,973 |
Ordinary shares | Share capital | Additional paid-in capital | Treasury shares at cost | Accumulated other comprehensive loss | Accumulated deficit | Total shareholders' equity | ||||||||||||||||||||||
Balance as of January 1, 2023 | 84,353,681 | $ | 224 | $ | 432,214 | $ | (20,091 | ) | $ | (11,156 | ) | $ | (281,408 | ) | $ | 119,783 | ||||||||||||
Exercise of options and vesting of RSUs | 38,571 | - | 30 | - | - | - | 30 | |||||||||||||||||||||
Share-based compensation | - | - | 1,977 | - | - | - | 1,977 | |||||||||||||||||||||
Other comprehensive income, net | - | - | - | - | 536 | - | 536 | |||||||||||||||||||||
Net income | - | - | - | - | - | 4,056 | 4,056 | |||||||||||||||||||||
Balance as of June 30, 2023 (Unaudited) | 84,392,252 | $ | 224 | $ | 434,221 | $ | (20,091 | ) | $ | (10,620 | ) | $ | (277,352 | ) | $ | 126,382 |
Six months ended June 30, | ||||||||
2022 | 2023 | |||||||
Unaudited | ||||||||
Cash flow from operating activities: | ||||||||
Net income (loss) | $ | (3,808 | ) | $ | 4,056 | |||
Adjustments required to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 5,775 | 5,135 | ||||||
Loss from sale of property and equipment, net | 20 | 30 | ||||||
Stock-based compensation expense | 1,435 | 1,977 | ||||||
Decrease in accrued severance pay and pensions, net | (369 | ) | (344 | ) | ||||
Increase in trade receivables, net | (4,173 | ) | (6,910 | ) | ||||
Decrease (increase) in other accounts receivables and prepaid expenses (including other long-term assets) | (3,056 | ) | 551 | |||||
Decrease in operating lease right-of-use assets | 1,873 | 1,897 | ||||||
Decrease in inventory, net of write off | 449 | 4,059 | ||||||
Increase (decrease) in trade payables | 1,339 | (3,955 | ) | |||||
Increase (decrease) in other accounts payable and accrued expenses (including other long-term liabilities) | (1,706 | ) | 2,326 | |||||
Decrease in operating lease liability | (4,071 | ) | (2,518 | ) | ||||
Increase in deferred revenues | 1,303 | 386 | ||||||
Net cash provided by (used in) operating activities | (4,989 | ) | 6,690 | |||||
Cash flow from investing activities: | ||||||||
Purchase of property and equipment | (5,368 | ) | (5,472 | ) | ||||
Purchase of intangible assets, net | (437 | ) | (1,837 | ) | ||||
Net cash used in investing activities | (5,805 | ) | (7,309 | ) | ||||
Cash flow from financing activities: | ||||||||
Proceeds from exercise of stock options | 113 | 30 | ||||||
Proceeds from bank credits and loans, net | 17,100 | 2,050 | ||||||
Net cash provided by financing activities | 17,213 | 2,080 | ||||||
Translation adjustments on cash and cash equivalents | 94 | 120 | ||||||
Increase in cash and cash equivalents | 6,513 | 1,581 | ||||||
Cash and cash equivalents at the beginning of the period | 17,079 | 22,948 | ||||||
Cash and cash equivalents at the end of the period | $ | 23,592 | $ | 24,529 |
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 1: | GENERAL |
NOTE 2: | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
a. | Interim consolidated financial statements |
b. | Use of estimates |
c. | Significant accounting policies |
8
CERAGON NETWORKS LTD. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
d. | Restructuring and related charges |
NOTE 3: | INVENTORIES |
December 31, | June 30, | |||||||
2022 | 2023 | |||||||
Unaudited | ||||||||
Raw materials | $ | 35,111 | $ | 36,351 | ||||
Work in progress | 143 | 185 | ||||||
Finished products | 36,755 | 31,300 | ||||||
$ | 72,009 | $ | 67,836 |
NOTE 4: | FAIR VALUE MEASUREMENT |
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CERAGON NETWORKS LTD. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 4: | FAIR VALUE MEASUREMENT (Cont.) |
Fair value measurements using input type | ||||||||||||
Fair value hierarchy | December 31, 2022 | June 30, 2023 | ||||||||||
Unaudited | ||||||||||||
Derivatives instruments, net | Level 2 | $ | (1,415 | ) | $ | (1,719 | ) | |||||
Total liabilities, net | $ | (1,415 | ) | $ | (1,719 | ) |
NOTE 5: | DERIVATIVE INSTRUMENTS |
Other accounts receivable and prepaid expenses | Other accounts payable and accrued expenses | |||||||
December 31, 2022 | ||||||||
Derivatives designated as hedging instruments | ||||||||
Currency forward contracts | $ | - | $ | (1,270 | ) | |||
Derivatives not designated as hedging instruments | ||||||||
Currency forward and option contracts | $ | 8 | $ | (153 | ) | |||
Total derivatives | $ | 8 | $ | (1,423 | ) |
Other accounts receivable and prepaid expenses | Other accounts payable and accrued expenses | |||||||
June 30, 2023 | ||||||||
Unaudited | ||||||||
Derivatives designated as hedging instruments | ||||||||
Currency forward contracts | $ | - | $ | (1,644 | ) | |||
Derivatives not designated as hedging instruments | ||||||||
Currency forward and option contracts | $ | - | $ | (75 | ) | |||
Total derivatives | $ | - | $ | (1,719 | ) |
10
CERAGON NETWORKS LTD. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 5: | DERIVATIVE INSTRUMENTS (Cont.) |
December 31, 2022 | June 30, 2023 | |||||||
Unaudited | ||||||||
Derivatives designated as hedging instruments | ||||||||
Currency forward contracts | $ | 42,848 | $ | 25,783 | ||||
Derivatives not designated as hedging instruments | ||||||||
Currency forward and option contracts | $ | 16,082 | $ | 6,482 | ||||
Total derivatives | $ | 58,930 | $ | 32,265 |
Six months ended June 30, | ||||||||
2022 | 2023 | |||||||
Unaudited | ||||||||
Operating expenses | $ | 293 | $ | 1,517 | ||||
Financial expenses | $ | 617 | $ | 620 |
NOTE 6: | COMMITMENTS AND CONTINGENT LIABILITIES
|
a. | Israel Innovation Authority: |
| b. | Charges and guarantees: |
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CERAGON NETWORKS LTD. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
c. | Litigations: | ||
The Company is currently involved in various claims and legal proceedings. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss. | |||
1) | Motion to Approve a Class Action (District Court of Tel Aviv - Economic Department) |
12
CERAGON NETWORKS LTD. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
13
CERAGON NETWORKS LTD. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
14
CERAGON NETWORKS LTD. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
2) | Claim against Station Enterprises Ltd. regarding breach of the Lease Agreement |
15
CERAGON NETWORKS LTD. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 7: | SHAREHOLDERS' EQUITY |
a. | Ordinary shares |
b. | Stock Options and RSUs plans |
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CERAGON NETWORKS LTD. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
Six months ended June 30, 2023 | ||||||||||||||||
Number of options | Weighted average exercise price | Weighted average remaining contractual term (in years) | Aggregate intrinsic value | |||||||||||||
Outstanding at beginning of year | 5,305,732 | $ | 2.95 | 3.83 | $ | 19 | ||||||||||
Granted | 607,478 | 1.93 | ||||||||||||||
Exercised | (17,915 | ) | 1.70 | |||||||||||||
Forfeited or expired | (644,249 | ) | 3.06 | |||||||||||||
Outstanding at end of the period | 5,251,046 | 2.82 | 3.58 | $ | 153 | |||||||||||
Options exercisable at end of the period | 2,725,843 | $ | 2.94 | 2.52 | $ | 17 | ||||||||||
Vested and expected to vest | 3,933,732 | $ | 2.87 | 3.19 | $ | 76 |
Number of RSUs | Weighted average fair value | |||||||
Unvested at beginning of year | 2,108,339 | |||||||
Granted | 429,620 | $ | 1.88 | |||||
Vested | (20,656 | ) | ||||||
Forfeited | (159,303 | ) | ||||||
Unvested at end of period | $ | 2,358,000 |
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CERAGON NETWORKS LTD. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
Six months ended June 30, | ||||||||
2022 | 2023 | |||||||
Unaudited | ||||||||
Cost of revenues | 257 | 226 | ||||||
Research and development | 20 | 477 | ||||||
Sales and Marketing | 579 | 738 | ||||||
General and administrative | 579 | 536 | ||||||
Total share-based compensation expense | $ | 1,435 | $ | 1,977 |
Six months ended June 30, 2023 | ||||
Balance, beginning of the period | $ | 14,888 | ||
New unsatisfied performance obligations | 3,099 | |||
Reclassification to revenue as a result of satisfying performance obligations | (2,713 | ) | ||
Balance, end of the period | 15,274 | |||
Less: long-term portion of deferred revenue | 12,170 | |||
Current portion, end of period | $ | 3,104 |
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CERAGON NETWORKS LTD. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
2024 | 2025 and thereafter | |||||||
Unsatisfied performance obligations | $ | 670 | $ | 11,500 |
a. | The following table presents the total revenues for the six months ended June 30, 2022 and 2023, allocated to the geographic areas in which it was generated. Revenues are attributed to geographic areas based on the location of the end-users. |
Six months ended June 30, | ||||||||
2022 | 2023 | |||||||
Unaudited | ||||||||
North America (*) | $ | 28,296 | $ | 48,572 | ||||
Europe | 22,791 | 22,741 | ||||||
Africa | 10,032 | 9,153 | ||||||
Asia-Pacific and Middle East | 17,239 | 19,625 | ||||||
India | 37,300 | 46,933 | ||||||
Latin America | 25,335 | 22,536 | ||||||
$ | 140,993 | $ | 169,560 |
b. | Major customer data as a percentage of total revenues: In the six months ended June 30, 2022, the Company had revenues from two customers that represent two groups of affiliated companies equaling 22.4% and 14% of total revenues. In the six months ended June 30, 2023, the Company had revenues from two customers that represents one group of affiliated companies equaling 25.2% of total revenues and a costumer that equal 18.8% of total revenues. |
19
CERAGON NETWORKS LTD. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
a. | Numerator: |
Six months ended June 30, | ||||||||
2022 | 2023 | |||||||
Unaudited | ||||||||
Numerator for basic and diluted income (loss) per share - | ||||||||
Net income (loss) available to holders of ordinary shares | $ | (3,808 | ) | $ | 4,056 |
b. | Denominator: |
Six months ended June 30, | ||||||||
2022 | 2023 | |||||||
Unaudited | ||||||||
Denominator for diluted income (loss) per share - | �� | |||||||
Weighted average number of shares | 83,989,766 | 84,359,762 | ||||||
Add – RSUs and stock options | - | 792,872 | ||||||
Denominator for diluted income (loss) per share - adjusted | 83,989,766 | 85,152,634 |
20