EX-99 2 exhibit_a.htm 6-K

Exhibit A

CERAGON NETWORKS REPORTS FOURTH QUARTER AND
YEAR-END 2008 FINANCIAL RESULTS

TEL AVIV, Israel, February 4, 2009 – Ceragon Networks Ltd. (NASDAQ and TASE: CRNT), a leading provider of high-capacity wireless backhaul solutions, today reported results for the fourth quarter and year which ended December 31, 2008.

Revenues for the fourth quarter of 2008 were $56.8 million, up 23.0% from $46.1 million for the fourth quarter of 2007 and down 2.3% from $58.1 million in the third quarter of 2008.

Net income in accordance with US Generally Accepted Accounting Principles (GAAP) for the fourth quarter of 2008 was $2.7 million or $0.07 per basic and diluted share, compared to net income of $4.4 million in the fourth quarter of 2007, or $0.13 per basic share and $0.12 per diluted share.

On a non-GAAP basis, net income for the fourth quarter, excluding $594,000 of equity-based compensation expenses, was $3.3 million, or $0.09 per basic and diluted share. Non-GAAP net income for the fourth quarter of 2007 was $4.9 million, or $0.15 per basic share and $0.14 per diluted share (please refer to the accompanying financial table for reconciliation of GAAP financial information to non-GAAP).

Revenues for the full year of 2008 were $217.3 million, up 34.2% from $161.9 million in 2007. Net income on a GAAP basis for 2008 was $26 million or $0.70 per basic share and $0.68 per diluted share including $11.2 million of tax benefit relates to the initial creation of deferred tax asset in the second quarter of 2008. Net income for the year 2007 was $13.1 million or $0.44 per basic share and $0.41 per diluted share.

On a non-GAAP basis, net income for 2008 was $17.3 million, or $0.47 per basic share and $0.45 per diluted share compared to a non-GAAP net income of $15.3 million, or $0.52 per basic share and $0.48 per diluted share for 2007.

Gross margin on a GAAP basis in the fourth quarter of 2008 was 33.4% of revenues. Gross margin on a non-GAAP basis in the fourth quarter of 2008 was 33.5% of revenues.

Cash and cash investments at the end of the quarter were $97.8 million.

“In 2008 we continued to achieve excellent growth based on the strong foundation we’ve been building for several years” said Ira Palti, President and CEO of Ceragon. The underlying drivers of our business, such as growth in mobile data usage and mobile subscriber growth, are part of long term trends expected to continue for several years. Meanwhile, we lack short term visibility as customers focus on maintaining flexibility, reducing inventory and conserving cash in response to the spreading global financial crisis. We will manage through this period by staying close to our customers, capitalizing on our strong position, and preparing to take the company to the next level once economic conditions improve.”

Supplemental revenue breakouts:

Geographical breakdown:
	Fourth quarter 2008			Full year 2008



Asia Pacific		47	%		52	%
Europe Middle-East and Africa		34	%		31	%
North America		12	%		9	%
Latin America		7	%		8	%

Segment breakdown:
	Fourth quarter 2008			Full Year 2008



Service providers		88	%		88	%
Private networks		12	%		12	%

A conference call discussing Ceragon’s results for the fourth quarter of 2008, will take place today, February 4, 2009, at 9:00 a.m. (ET). Investors are invited to join the Company’s teleconference by calling (800) 230-1093 or international (612) 332-0228 at 8:50 a.m. ET. 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/ir_events.asp?lang=0 selecting the webcast link, and following the registration instructions.

If you are unable to join us live, the replay numbers are: (800) 475-6701 or international (320) 365-3844, Access code 980455.

A replay of both the call and the webcast will be available through March 4, 2009.

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About Ceragon Networks Ltd.

Ceragon Networks Ltd. (NASDAQ and TASE: CRNT) is a leading provider of high capacity wireless backhaul solutions that enable wireless service providers to deliver voice and premium data services, such as Internet browsing, music and video applications. Ceragon’s wireless backhaul solutions use microwave technology to transfer large amounts of network traffic between base stations and the infrastructure at the core of the mobile network. Ceragon designs solutions to provide fiber-like connectivity for circuit-switched, or SONET/SDH, networks, next generation Ethernet/Internet Protocol, or IP-based, networks, and hybrid networks that combine circuit-switched and IP-based networks. Ceragon’s solutions support all wireless access technologies, including GSM, CDMA, EV-DO and WiMAX. These solutions address wireless service providers’ need to cost-effectively build-out and scale their infrastructure to meet the increasing demands placed on their networks by growing numbers of subscribers and the increasing demand for premium data services. Ceragon also provides its solutions to businesses and public institutions that operate their own private communications networks. Ceragon’s solutions are deployed by more than 150 service providers of all sizes, as well as in hundreds of private networks, in nearly 100 countries. More information is available at www.ceragon.com

Ceragon Networks^®, CeraView^®, FibeAir^® the FibeAir^® design mark and Native²^® 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.

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. These are important factors that could cause actual results to differ materially from forecasts and estimates. 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.

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Ceragon Reports Fourth Quarter and Year-End 2008 Results

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

	Year ended December 31				Three months ended December 31,
	2008		2007		2008		2007



Revenues	$	217,278	$	161,888	$	56,779	$	46,145

Cost of revenues		144,607		103,406		37,802		29,454


Gross profit		72,671		58,482		18,977		16,691


Operating expenses:
Research and development		20,310		15,457		5,195		4,373
Selling and marketing		32,252		25,344		8,989		7,220
General and administrative		7,150		5,277		2,160		1,526

Expense in respect to settlement
reserve		-		450		-		-


Total operating expenses	$	59,712	$	46,528	$	16,344	$	13,119


Operating profit		12,959		11,954		2,633		3,572
Financial income, net		2,184		1,182		69		856


Income before taxes		15,143		13,136		2,702		4,428

Tax benefit		10,834		-		36		-


Net Income	$	25,977	$	13,136	$	2,738	$	4,428


Basic net earnings per share	$	0.70	$	0.44	$	0.07	$	0.13


Diluted net earnings per share	$	0.68	$	0.41	$	0.07	$	0.12


Weighted average number of shares used
in computing basic net earnings per
share		36,863,684		29,692,670		36,517,147		33,152,306


Weighted average number of shares used
in computing diluted net earnings
per share		38,338,584		32,101,393		36,938,654		35,889,636

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Ceragon Reports Fourth Quarter and Year-End 2008 Results

CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
(Unaudited)

	December 31, 2008			December 31, 2007




ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	28,224		$	58,650
Short-term bank deposits		35,044			25,997
Marketable securities		2,187			6,399
Trade receivables, net		70,811			40,533
Deferred taxes		4,082			-
Other accounts receivable and prepaid expenses		11,508			10,888
Inventories		40,113			36,763


Total current assets	$	191,969		$	179,230


LONG-TERM INVESTMENTS:
Long-term bank deposits		8,204			12,030
Long-term marketable securities		24,102			18,665
Severance pay funds		4,065			3,268
Deferred taxes		8,007			-


Total long-term investments	$	44,378		$	33,963


PROPERTY AND EQUIPMENT, NET		8,891			4,447


Total assets	$	245,238		$	217,640


LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Trade payables	$	41,998		$	25,173
Deferred revenues		5,886			6,702
Other accounts payable and accrued expenses		7,791			14,935


Total current liabilities	$	55,675		$	46,810


LONG-TERM LIABILITIES
Accrued severance pay		6,647			5,286
Other payables		-			4,650


Total long-term liabilities	$	6,647		$	9,936


SHAREHOLDERS' EQUITY:
Share capital:
Ordinary shares		91			91
Additional paid-in capital		285,141			281,086
Treasury shares at cost		(7,923	)		-
Other comprehensive income		193			280
Accumulated deficits		(94,586	)		(120,563	)


Total shareholders' equity	$	182,916		$	160,894


Total liabilities and shareholders' equity	$	245,238		$	217,640

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Ceragon Reports Fourth Quarter and Year-End 2008 Results

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)

	Three months ended December 31,						Year ended December 31,
	2008			2007			2008			2007



Cash flow from operating activities:
Net income	$	2,738		$	4,428		$	25,977		$	13,136
Adjustments to reconcile net income to net cash used in
operating activities:

Depreciation		685			382			2,070			1,342
Stock-based compensation expense		594			480			2,557			1,758
Increase in trade and other receivables, net		(7,299	)		(9,775	)		(30,918	)		(16,847	)
Decrease (increase) in inventory		(657	)		2,306			(3,350	)		(9,452	)
Increase (decrease) in trade payables and accrued
liabilities		(687	)		(2,441	)		8,579			6,623
Increase (decrease) in deferred revenues		257			(487	)		(816	)		2,963
Increase in deferred tax asset		(241	)		-			(11,353	)		-
Increase (decrease) in long term payable		-			388			(4,650	)		(3,275	)
Other adjustments		97			(692	)		349			(576	)

Net cash used in operating activities	$	(4,513	)	$	(5,411	)	$	(11,555	)	$	(4,328	)


Cash flow from investing activities:
Purchase of property and equipment ,net		(1,956	)		(647	)		(5,029	)		(2,830	)
Investment in short and long-term bank deposit		(13,124	)		(33,627	)		(66,267	)		(35,654	)
Proceeds from short and long-term bank deposits		13,542			371			61,376			6,181
Investment in held-to-maturity marketable
securities		-			(20,286	)		(14,851	)		(22,186	)
Proceeds from maturities of held-to-maturity marketable
securities		7,450			3,908			13,500			8,638

Net cash provided by (used in) investing activities	$	5,912		$	(50,281	)	$	(11,271	)	$	(45,851	)


Cash flow from financing activities:
Proceeds from exercise of options		104			1,111			695			9,959
Proceeds from issuance of shares, net		-			88,700			-			88,700
Issuance costs		-			-			(372	)		-
Purchase of treasury shares at cost		(7,923	)		-			(7,923	)		-

Net cash provided by (used in) financing activities	$	(7,819	)	$	89,811		$	(7,600	)	$	98,659


Increase (decrease) in cash and cash equivalents	$	(6,420	)	$	34,119		$	(30,426	)	$	48,480


Cash and cash equivalents at the beginning of the period		34,644			24,531			58,650			10,170

Cash and cash equivalents at the end of the period	$	28,224		$	58,650		$	28,224		$	58,650

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Ceragon Reports Fourth Quarter and Year-End 2008 Results

RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
U.S. dollars in thousands, except share and per share data

	Three months ended December 31, 2008						2007
	GAAP (as reported)		Adjustments (*)		Non-GAAP		Non-GAA



Revenues	$	56,779			$	56,779	$	46,145
Cost of revenues		37,802		53		37,749		29,419


Gross profit		18,977				19,030		16,726


Operating expenses:
Research and development		5,195		127		5,068		4,284
Selling and marketing		8,989		237		8,752		6,996
General and administrative		2,160		177		1,983		1,394

Total operating expenses	$	16,344			$	15,803	$	12,674


Operating profit		2,633				3,227		4,052
Financial income, net		69				69		856


Income before taxes		2,702				3,296		4,908

Tax benefit on income		36				36		-


Net income	$	2,738			$	3,332	$	4,908


Basic net earnings per share	$	0.07			$	0.09	$	0.15


Diluted net earnings per share	$	0.07			$	0.09	$	0.14


Weighted average number of shares used in
computing basic net earnings per share		36,517,147				36,517,147		33,152,306


Weighted average number of shares used in
computing diluted net earnings per share		36,938,654				36,938,654		35,889,636


Total adjustments				594

(*) Adjustments related to equity based compensation expenses according to SFAS 123 (R)

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Ceragon Reports Fourth Quarter and Year-End 2008 Results

RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
U.S. dollars in thousands, except share and per share data

	Year ended December 31, 2008								2007
	GAAP (as reported)		Adjustments			Non-GAAP			Non-GAAP



Revenues	$	217,278				$	217,278		$	161,888

Cost of revenues		144,607		257	(*)		144,350			103,280


Gross profit		72,671					72,928			58,608


Operating expenses:
Research and development		20,310		586	(*)		19,724			15,164
Selling and marketing		32,252		1,007	(*)		31,245			24,596
General and administrative		7,150		707	(*)		6,443			4,686


Total operating expenses	$	59,712				$	57,412		$	44,446

Operating profit		12,959					15,516			14,162
Financial income, net		2,184					2,184			1,182


Income before taxes		15,143					17,700			15,344

Tax benefit (taxes on income)		10,834		(11,207	)(**)		(373	)		-


Net income	$	25,977				$	17,327		$	15,344


Basic net earnings per share	$	0.70				$	0.47		$	0.52


Diluted net earnings per share	$	0.68				$	0.45		$	0.48


Weighted average number of shares used in
computing basic net earnings per share
		36,863,684					36,863,684			29,692,670


Weighted average number of shares used in computing diluted net earnings per share		38,338,584					38,338,584			32,101,393


Total adjustments				(8,650	)

(*) Adjustments related to equity based compensation expenses according to SFAS 123 (R)
(**)Adjustment related to initial creation of deferred tax asset.

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Ceragon Reports Fourth Quarter and Year-End 2008 Results

Contact: Vered Shaked
Investor Relations Manager
Ceragon Networks Ltd.
Int'l +(972) 52 573 5513
US (201) 853 0228
vereds@ceragon.com

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