exhibit_10-1.htm











Exhibit 10.1


 


CONTACTS







Chief Financial Officer


Meir Moshe


+972-3766-8610







Corporate Relations


Joyce Anne Shulman


+1 201 785 3209


joyceannes@radware.com




 


For Immediate Release







Radware Ltd Announces 4Q10 Results







* Record quarterly revenues of $39.1 million


* Record Non-GAAP operating income $5.8M


* Record Non-GAAP EPS of $0.29


* Record annual revenues of $144.1 million







TEL AVIV, ISRAEL.; February 3, 2011 — Radware (NASDAQ: RDWR), a leading provider of integrated application delivery solutions for business-smart networking, today reported record quarterly revenues of $39.1 million for the fourth quarter of 2010. This represents an increase of 6% compared with revenues of $36.8 million for the third quarter of 2010, and an increase of 22% compared with revenues of $32.1 million in the fourth quarter of 2009.







Total revenues for 2010 were $144.1 million, an increase of 32% compared with revenues of $108.9 million in 2009.







Net income on a GAAP basis for the fourth quarter of 2010 was $3.9 million or $0.17 per diluted share, compared with a net income of $3.7 million or $0.17 per diluted share for the third quarter of 2010 and to $1.7 million or $0.09 million per diluted share in the fourth quarter of 2009.







Net income on a Non-GAAP basis for the fourth quarter of 2010 was $6.6 million or $0.29 per diluted share, compared with a net income of $5.6 million or $0.26 per diluted share for the third quarter of 2010 and to $4.0 million or $0.21 per diluted share in the fourth quarter of 2009.







Net income on a GAAP basis for 2010 was $9.6 million or $0.44 per diluted share compared with a net loss of $5.9 million or $0.31 per diluted share in 2009.







Net income on a Non-GAAP basis for 2010 was $20.1 million or $0.92 per diluted share compared with a net gain of $4.6 million or $0.24 per diluted share in 2009.


 


At the end of the fourth quarter of 2010, the company’s overall cash position including cash, short-term and long-term bank deposits and marketable securities amounted to $178.8 million, representing an increase in the company's cash position of approximately $6.5 million in the fourth quarter or $52.7 million in the last 12 months.


 




  





  











  











“We see our industry lead in virtualization of the application delivery layer as a strong market share and revenue growth catalyst and we were very pleased to already see in Q4 significant contribution from our newly announced VADI architecture,” stated Roy Zisapel, President & CEO Radware. “In addition, strong customer account success with our attack mitigation products, and continued penetration of the service provider market in Q4, has contributed to our increased profits and market share. It is our belief these trends will continue to attain even more positive results for 2011.”







During the quarter ended December 31, 2010, Radware released the following significant announcements:


 



	
  

	
·

	
Radware Accelerates Applications with New Alteon Version








	
  

	
·

	
LifeWay Christian Resources Relies on Radware’s Application Delivery Services to Support its Rapidly Growing e-Commerce and Corporate Networks








	
  

	
·

	
Radware’s DefensePro Earns “Recommend” Rating from NSS Labs for Attack Mitigation








	
  

	
·

	
Radware Offers Multichannel Retailers Best Practices for Cyber Monday








	
  

	
·

	
Radware takes APSolute Attack Prevention to the Next Level to Empower the Fight Against Online Fraud








	
  

	
·

	
Radware Collects 2010 INTERNET TELEPHONY Excellence Award








	
  

	
·

	
Radware Positioned in the Leaders Quadrant of the Magic Quadrant for Application Delivery Controllers








	
  

	
·

	
Radware Launches its Smart Choice Partner Program








	
  

	
·

	
Radware Helps SK Group Support Next-Generation Unified Communications Platform












Company management will host a quarterly investor conference call at 8:45 AM ET on Thursday, February 3rd, 2011. The call will focus on financial results for the quarter ending December 31, 2010, and certain other matters related to the company’s business.







Please use the following dial-in numbers to participate in the fourth quarter 2010 call:







Participants in the US call: Toll Free 1 877 392 9880


International participants call: +1 760 666 3769 







The conference call will be webcast on Thursday February 3rd at 8:45am ET in the “listen only” mode via the Internet at: http://www.radware.com/Company/InvestorRelations/default.aspx and will be available for replay during the next 30 days.


 


About Radware


Radware (NASDAQ:RDWR), a global leader in integrated application delivery solutions, assures the full availability, maximum performance, and complete security of business-critical applications for nearly 10,000 enterprises and carriers worldwide. With APSolute®, Radware’s comprehensive and award-winning suite of application delivery and network security products, companies in every industry can drive business productivity, improve profitability, and reduce IT operating and infrastructure costs by making their networks “business smart”. For more information, please visit www.radware.com.









  





  











  






 


Use of Non-GAAP Financial Information


In addition to reporting financial results in accordance with generally accepted accounting principles (GAAP), Radware uses non-GAAP measures of net operating income, net income and earnings per share, which are adjustments from results based on GAAP to exclude stock-based compensation expenses, in accordance with ASC No. 718, amortization of intangible assets , acquisition-related expenses, unrealized gains up to the amount of losses recorded in previous quarters, in severance pay funds and exchange rate differences, net on balance sheet items included in finance income . Such exchange rate differences may vary from period to period due to changes in exchange rates driven by general market conditions or other circumstances outside of the normal course of Radware's operations. Management believes that exclusion of these charges allows comparisons of operating results that are consistent across past, present and future periods. Radware’s management believes the non-GAAP financial information provided in this release is useful to investors for the purpose of understanding and assessing Radware’s ongoing operations. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures discussed in this press release, to the most directly comparable GAAP financial measures, is included with the financial information contained in this press release. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and, as such, has determined that it is important to provide this information to investors.


 


###


 


This press release may contain forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, general business conditions in the Application Switching and Network Security industry, changes in demand for Application Switching and Network Security products, the timing and amount or cancellation of orders and other risks detailed from time to time in Radware's filings with the Securities and Exchange Commission, including Radware's Form 20-F.









  





  











  














	
Consolidated Balance Sheets


	
(U.S. Dollars in thousands)







 




	  	 	
December 31,


 2009

	 	 	
December 31,


 2010

	 
	  	 	
(Audited)

	 	 	
(Unaudited)

	 
	
Current assets

	 	 	 	 	 	 
	
Cash and cash equivalents

	 	 	19,843	 	 	 	14,814	 
	
Available-for-sale marketable securities

	 	 	29,117	 	 	 	24,200	 
	
Short term bank deposits

	 	 	10,130	 	 	 	51,911	 
	
Trade receivables, net

	 	 	16,603	 	 	 	16,543	 
	
Other receivables and prepaid expenses

	 	 	2,934	 	 	 	3,402	 
	
Inventories

	 	 	9,792	 	 	 	9,722	 
	  	 	 	88,419	 	 	 	120,592	 
	
Long-term investments

	 	 	 	 	 	 	 	 
	
Available-for-sale marketable securities

	 	 	42,021	 	 	 	82,864	 
	
Long-term bank deposits

	 	 	25,000	 	 	 	5,000	 
	
Severance pay funds

	 	 	2,514	 	 	 	3,342	 
	  	 	 	69,535	 	 	 	91,206	 
	  	 	 	 	 	 	 	 	 
	
Property and equipment, net

	 	 	11,220	 	 	 	11,801	 
	  	 	 	 	 	 	 	 	 
	
Other assets

	 	 	 	 	 	 	 	 
	
Intangible assets, net

	 	 	14,794	 	 	 	12,011	 
	
Other long-term assets

	 	 	467	 	 	 	560	 
	
Goodwill

	 	 	24,465	 	 	 	24,465	 
	  	 	 	 	 	 	 	 	 
	
Total assets

	 	 	208,900	 	 	 	260,635	 
	  	 	 	 	 	 	 	 	 
	
Current liabilities

	 	 	 	 	 	 	 	 
	
Trade payables

	 	 	5,699	 	 	 	5,913	 
	
Deferred revenues

	 	 	20,734	 	 	 	28,685	 
	
Other payables and accrued expenses

	 	 	12,413	 	 	 	18,538	 
	  	 	 	38,846	 	 	 	53,136	 
	  	 	 	 	 	 	 	 	 
	
Long-term liabilities

	 	 	 	 	 	 	 	 
	
Deferred revenues

	 	 	16,919	 	 	 	18,610	 
	
Accrued severance pay

	 	 	3,662	 	 	 	3,899	 
	  	 	 	20,581	 	 	 	22,509	 
	  	 	 	 	 	 	 	 	 
	
Shareholders’ equity

	 	 	 	 	 	 	 	 
	
Share capital

	 	 	465	 	 	 	506	 
	
Additional paid-in capital

	 	 	191,941	 	 	 	218,593	 
	
Accumulated other comprehensive income

	 	 	935	 	 	 	125	 
	
Treasury stock, at cost

	 	 	(18,036	)	 	 	(18,036	)
	
Accumulated deficit

	 	 	(25,832	)	 	 	(16,198	)
	
Total shareholders’ equity

	 	 	149,473	 	 	 	184,990	 
	  	 	 	 	 	 	 	 	 
	
Total liabilities and shareholders' equity

	 	 	208,900	 	 	 	260,635	 







 




  





  











  






 





	
Condensed Consolidated Statements of Operations

	 
	
(U.S. Dollars in thousands, except share and per share data)

	 
	  	 	
 


For the three months ended 


December 31,

	 	 	
 


For the Year ended


 December 31,

	 
	  	 	
2009

	 	 	
2010

	 	 	
2009

	 	 	
2010

	 
	  	 	
(Unaudited)

	 	 	
(Unaudited)

	 	 	
(Audited)

	 	 	
(Unaudited)

	 
	  	 	 	 	 	 	 	 	 	 	 	 	 
	
Revenues

	 	 	32,118	 	 	 	39,054	 	 	 	108,904	 	 	 	144,119	 
	
Cost of revenues

	 	 	6,564	 	 	 	7,968	 	 	 	23,275	 	 	 	29,204	 
	
Gross profit

	 	 	25,554	 	 	 	31,086	 	 	 	85,629	 	 	 	114,915	 
	
Operating expenses:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Research and development

	 	 	6,723	 	 	 	8,280	 	 	 	25,674	 	 	 	31,660	 
	
Selling and marketing

	 	 	14,873	 	 	 	16,947	 	 	 	55,130	 	 	 	64,609	 
	
General and administrative

	 	 	2,552	 	 	 	2,534	 	 	 	11,930	 	 	 	10,190	 
	
Total operating expenses

	 	 	24,148	 	 	 	27,761	 	 	 	92,734	 	 	 	106,459	 
	
Operating income (loss)

	 	 	1,406	 	 	 	3,325	 	 	 	(7,105	)	 	 	8,456	 
	
Financial income, net

	 	 	506	 	 	 	855	 	 	 	1,987	 	 	 	2,057	 
	
Income (loss) before income taxes

	 	 	1,912	 	 	 	4,180	 	 	 	(5,118	)	 	 	10,513	 
	
Income taxes

	 	 	(225	)	 	 	(256	)	 	 	(818	)	 	 	(879	)
	
Net income (loss)

	 	 	1,687	 	 	 	3,924	 	 	 	(5,936	)	 	 	9,634	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Basic net income (loss) per share

	 	$	0.09	 	 	$	0.19	 	 	$	(0.31	)	 	$	0.49	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Weighted average number of shares used to compute basic net income (loss) per share

	 	 	  18,881,697	 	 	 	  20,360,557	 	 	 	  18,879,230	 	 	 	  19,557,545	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Diluted net income (loss) per share

	 	$	0.09	 	 	$	0.17	 	 	$	(0.31	)	 	$	0.44	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Weighted average number of shares used to compute diluted net income (loss) per share

	 	 	  19,347,159	 	 	 	  22,796,721	 	 	 	  18,879,230	 	 	 	  21,733,638	 














  





  











  






 




	
Reconciliation of Supplemental Financial Information


	
(U.S. Dollars in thousands, except share and per share data)







 






	  	 	
For the Three months ended 


December 31,

	 	 	
For the Year


ended December 31,

	 
	 	 	2009	 	 	2010	 	 	2009	 	 	2010	 
	  	 	
(Unaudited)

	 	 	
(Unaudited)

	 	 	
(Unaudited)

	 	 	
(Unaudited)

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
GAAP net income (loss)

	 	 	 1,687	 	 	 	 3,924	 	 	 	(5,936	)	 	 	9,634	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Stock-based compensation expenses, included in:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Cost of revenues

	 	 	16	 	 	 	16	 	 	 	71	 	 	 	63	 
	
Research and development

	 	 	217	 	 	 	304	 	 	 	630	 	 	 	1,247	 
	
Selling and marketing

	 	 	407	 	 	 	627	 	 	 	1,164	 	 	 	2,393	 
	
General and administrative

	 	 	585	 	 	 	409	 	 	 	2,176	 	 	
 1,789

	 
	  	 	 	1,225	 	 	 	1,356	 	 	 	4,041	 	 	
5,492

	 
	
Amortization of intangible assets and other acquisition related adjustments included in:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Cost of revenues

	 	 	427	 	 	 	540	 	 	 	2,319	 	 	 	1,757	 
	
Selling and marketing

	 	
629

	 	 	
531

	 	 	
1,928

	 	 	
2,284

	 
	  	 	 	1,056	 	 	
1,071

	 	 	 	4,247	 	 	 	4,041	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Acquisition related expenses

	 	 	-	 	 	 	-	 	 	 	2,485	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	

Unrealized gain in severance pay funds, included in:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Research and development

	 	 	-	 	 	 	-	 	 	 	(303	)	 	 	-	 
	
Selling and marketing

	 	 	-	 	 	 	-	 	 	 	(63	)	 	 	-	 
	
General and administrative

	 	 	-	 	 	 	-	 	 	
(55

	) 	 	 	-	 
	  	 	 	-	 	 	 	-	 	 	
(421

	) 	 	 	-	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Exchange rate differences, net on balance sheet items included in financial income, net

	 	 	      42	 	 	 	       212	 	 	 	       158	 	 	 	       921	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Non-GAAP net income

	 	 	 4,010	 	 	 	 6,563	 	 	 	4,574	 	 	 	20,088	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Non-GAAP diluted net income per share

	 	$	0.21	 	 	$	0.29	 	 	$	0.24	 	 	$	0.92	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Weighted average number of shares used to compute Non-GAAP diluted net income per share

	 	 	    19,347,159	 	 	 	    22,796,721	 	 	 	    18,945,289	 	 	 	    21,733,638