EX-99 2 exhibit_a.htm 6-K

Exhibit A

CERAGON NETWORKS® REPORTS SECOND QUARTER 2005
FINANCIAL RESULTS

Cellular Backhaul Continues to be Main Growth Driver for Ceragon

        TEL AVIV, Israel, July 21, 2005 – Ceragon Networks Ltd. (NASDAQ and TASE: CRNT), www.ceragon.com, a global provider of high-capacity broadband wireless systems, today reported results for the second quarter, which ended June 30, 2005.

        Revenues for the quarter were $17.97 million, up from $13 million for the second quarter of 2004 and from $16.8 million for the first quarter of 2005. This represents an increase of 38% as compared to the first quarter of 2004, and an increase of 6.8% as compared to the first quarter of 2005.

        Net income for the second quarter of 2005 increased to $1 million, or $0.04 per basic and diluted share. In comparison, net income in the second quarter of 2004 was $290 thousand or $0.01 per basic and diluted share.

        Gross profit for the second quarter of 2005 increased to $7.2 million, or 40.1% of revenues.

        Total cash, cash equivalents and liquid investments at the end of the quarter were $35.5 million.

        The second quarter of 2005 was another quarter of cellular business wins with sales to cellular operators representing over 50% of revenue.

        “Our strategy of targeting cellular operators is paying off and we are fast approaching sales of $10 million per quarter to Cellular operators with over 40 such customers. This growth trend continues as cellular operators require higher capacity networking solutions to upgrade existing networks, build new networks and begin providing 3G services,” said Shraga Katz, President and CEO, Ceragon Networks Ltd.

        “As my role shifts from day-to-day management to consultant and founding shareholder of the company, I would like to thank the Ceragon team. Ceragon is an outstanding company that is well-equipped to sustain growth and capitalize on the many opportunities going forward. I wish Ira Palti, the incoming CEO, good luck and I look forward to seeing Ceragon achieve new levels of success under his leadership”.

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Ceragon Reports Second Quarter 2005 Results – 2

        A conference call discussing Ceragon’s results for the second quarter of 2005 will take place today, July 30, 2005, at 9:00 a.m. (EST). Investors can also join the company’s teleconference by calling 719-457-2733 and referencing confirmation number 6304626 at 8:50 a.m. EST. The call-in lines will be available on a first-come, first-serve basis.

        Investors are also invited to listen to the call live via the Internet by accessing Ceragon Networks’ website at the investors’ page: http://www.ceragon.com/site/Investor_events.asp, selecting the webcast link, and following the registration instructions. The link will be accessible through Sunday, July 31, 2005.

About Ceragon Networks Ltd.

        Ceragon Networks Ltd. (NASDAQ & TASE: CRNT), a pacesetter in broadband wireless networking systems, enables rapid and cost-effective high-capacity network connectivity for mobile cellular infrastructure, fixed networks, private networks and enterprises. Ceragon’s modular FibeAir® product family operates across multiple frequencies, supports integrated high-capacity services over SONET/SDH, ATM and IP networks, and offers innovative built-in add/drop multiplexing and encryption functionality to meet the growing demand for value -added broadband services. Ceragon’s FibeAir product family complies with North American and international standards and is installed with over 150 customers in more than 60 countries. More information is available at www.ceragon.com.

        Ceragon Networks®, CeraView®, FibeAir® and the FibeAir® design mark are registered trademarks of Ceragon Networks Ltd., and Ceragon™, PolyView™, ConfigAir™, CeraMon™, EtherAir™, QuickAir™, QuickAir Partner Program™, QuickAir Partner Certification Program™, QuickAir Partner Zone™, EncryptAir™ and Microwave Fiber™ are trademarks of Ceragon Networks Ltd.

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Ceragon Reports Second Quarter 2005 Results – 3

CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except share and per share data

Six months ended
June 30,
 Three months ended
June 30,
 Year ended
December 31,
2005
 2004
 2005
 2004
 2004
 
Revenues     $ 34,791   $ 24,404   $ 17,972   $ 13,007   $ 54,831  
Cost of revenues    20,813    14,132    10,772    7,600    32,191  
   
Gross profit    13,978    10,272    7,200    5,407    22,640  
   
Operating expenses:  
Research and development    5,346    4,576    2,648    2,390    9,686  
Less - grants and participations    888    1,013    426    520    2,293  
   
Research and development, net    4,458    3,563    2,222    1,870    7,393  
Selling and marketing    6,456    5,583    3,367    2,848    11,645  
General and administrative    1,408    1,079    706    555    2,429  
Amortization of deferred stock      
compensation (a)    40    245    9    87    374  
   
Total operating expenses    12,362    10,470    6,304    5,360    21,841  
   
Operating Income (loss)    1,616    (198 )  896    47    799  
Financial income, net    226    435    121    182    674  
Other income    11    92    2    61    141  
   
Net income   $ 1,853   $ 329   $ 1,019   $ 290   $ 1,614  
   
Basic net earnings per share   $ 0.07   $ 0.01   $ 0.04   $ 0.01   $ 0.06  
Diluted net earnings per share   $ 0.07   $ 0.01   $ 0.04   $ 0.01   $ 0.06  
   
Weighted average number of shares  
used in computing basic net earnings  
per share    25,991,778    24,790,561    26,081,009    24,851,571    25,066,937  
   
Weighted average number of shares  
used in computing diluted net  
earnings per share    28,266,708    28,291,805    28,193,715    28,177,109    28,069,844  
   
    (a) Amortization of deferred stock   
          compensation relates to   
          the following:   
   
          Cost of revenues   $ 2   $ 22   $ -   $ 7   $ 36  
          Research and development  
            costs, net    12    58    -    14    86  
          Selling and marketing  
            expenses, net    16    134    5    59    196  
          General and  
            administrative expenses    10    31    4    7    56  
   
        Total amortization of   
          deferred stock compensation   $ 40   $ 245   $ 9   $ 87   $ 374  

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Ceragon Reports Second Quarter 2005 Results – 4

CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except share and per share data

June 30,
2005
 December 31,
2004
     ASSETS            
   
 CURRENT ASSETS:   
   Cash and cash equivalents   $ 12,862   $ 11,234  
   Short-term bank deposits    5,089    3,973  
   Marketable securities    6,577    11,101  
   Trade receivables, net    10,399    6,939  
   Other accounts receivable and prepaid expenses    3,787    4,435  
   Inventories    20,883    19,083  
   
 Total current assets     59,597    56,765  
   
 LONG-TERM INVESTMENTS:   
   Long-term bank deposits    5,288    4,451  
   Long-term marketable securities    5,665    7,042  
   Long-term receivables    390    390  
   Severance pay funds    1,972    1,947  
   
 Total long-term investments     13,315    13,830  
   
 PROPERTY AND EQUIPMENT, NET     2,494    2,516  
   
 Total assets    $ 75,406   $ 73,111  
   
     LIABILITIES AND SHAREHOLDERS' EQUITY   
   
 CURRENT LIABILITIES:   
 Trade payables   $ 10,123   $ 9,348  
 Deferred revenue    2,468    3,114  
 Other accounts payable and accrued expenses    5,260    5,476  
   
 Total current liabilities     17,851    17,938  
   
 ACCRUED SEVERANCE PAY     3,107    2,986  
   
 SHAREHOLDERS' EQUITY:   
   Share capital:  
   Ordinary shares of NIS 0.01 par value: Authorized:  
     40,000,000 shares as of March 31,2005 and June 30, 2005;  
     Issued and outstanding: 25,951,673 shares and 26,210,345  
     shares as of March 31,2005 and June 30, 2005, respectively    64    64  
   Additional paid-in capital    177,029    176,546  
   Deferred stock compensation    (33 )  (73 )
   Accumulated other comprehensive income    (53 )  62  
   Accumulated deficit    (122,559 )  (124,412 )
   
 Total shareholders' equity     54,448    52,187  
   
 Total liabilities and shareholders' equity    $ 75,406   $ 73,111  

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Ceragon Reports Second Quarter 2005 Results – 5

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 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 after the date any such statement is made.

Contacts:

Vered Shaked
Ceragon Networks Ltd.
+972-3-645-5513
ir@ceragon.com

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