EX-99 2 exhibit_a.htm 6-K

Exhibit A

CERAGON NETWORKS REPORTS THIRD QUARTER 2009
FINANCIAL RESULTS

        TEL AVIV, Israel, October 26, 2009 – Ceragon Networks Ltd. (NASDAQ and TASE: CRNT), a leading provider of high-capacity Ethernet and TDM wireless backhaul solutions, today reported results for the third quarter which ended September 30, 2009.

        Revenues for the third quarter of 2009 were $44.7 million, down 23% from $58.1 million for the third quarter of 2008 and up 6% from $42.2 million in the second quarter of 2009.

        Net income in accordance with US Generally Accepted Accounting Principles (GAAP) for the third quarter of 2009 was $1.1 million or $0.03 per basic share and diluted share, compared to net income of $3.5 million or $0.09 per basic and diluted share in the third quarter of 2008.

        On a non-GAAP basis, net income for the third quarter, excluding $696,000 of equity-based compensation expenses, was $1.8 million, or $0.05 per basic and diluted share. Non-GAAP net income for the third quarter of 2008 was $4.2 million, or $0.11 per basic and diluted share. (Please refer to the accompanying financial table for reconciliation of GAAP financial information to non-GAAP).

        Gross margin on a GAAP basis in the third quarter of 2009 was 31.8% of revenues. Gross margin on a non-GAAP basis in the third quarter of 2009 was 31.9% of revenues.

        Cash and cash investments at the end of the quarter were $99.8 million.

        “As expected, Q3 reflected the beginning of a trend toward improving revenues,” said Ira Palti, President and CEO of Ceragon. “Based on strong bookings again in Q3, we expect revenue growth to continue into next year, driven by ongoing demand for high capacity backhaul for cellular networks, particularly in the Asia Pacific region. In addition, our backlog is increasing, as we win more turnkey projects and successfully expand to a wide variety of new customers.”

Supplemental revenue breakouts:

Geographical breakdown:

Third quarter 2009
 
Asia Pacific      47 %
Europe Middle-East and Africa    39 %
North America    10 %
Latin America    4 %

        A conference call discussing Ceragon’s results for the third quarter of 2009, business conditions, outlook and guidance, will take place today, October 26, 2009, at 9:00 a.m. (EDT). Investors can join the Company’s teleconference by calling (800) 230-1096 or international (612) 332-0107 at 8:50 a.m. EDT.

        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/ir_events.asp 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: (320) 365-3844, Access Code 1167980.

        A replay of both the call and the webcast will be available through November 26, 2009.

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

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Ceragon Networks®, CeraView®, FibeAir® and the FibeAir® design mark are registered trademarks of Ceragon Network s 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 Third Quarter 2009 Results

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

Three months ended
September 30
 Nine months ended
September 30,
2009
 2008
 2009
 2008
 
 Revenues     $ 44,715   $ 58,097   $ 130,863   $ 160,499  
 Cost of revenues    30,499    39,786    88,263    106,805  
   
 Gross profit    14,216    18,311    42,600    53,694  
   
 Operating expenses:  
   Research and development    4,720    5,157    14,377    15,115  
   Selling and marketing    6,973    8,139    22,119    23,263  
   General and administrative    1,847    1,773    5,649    4,990  
   
 Total operating expenses    $ 13,540   $ 15,069   $ 42,145   $ 43,368  
   
 Operating profit    676    3,242    455    10,326  
 Financial income, net    446    490    1,268    2,115  
   
 Income before taxes    1,122    3,732    1,723    12,441  
   
 Tax benefit (taxes on income)    (43 )  (250 )  (196 )  10,798  
   
 Net Income   $ 1,079   $ 3,482   $ 1,527   $ 23,239  
   
 Basic net earnings per share   $ 0.03   $ 0.09   $ 0.04   $ 0.63  
   
 Diluted net earnings per share   $ 0.03   $ 0.09   $ 0.04   $ 0.60  
   
 Weighted average number of shares used  
   in computing basic net earnings per  
   share    34,178,001    37,020,035    34,407,042    36,980,039  
   
 Weighted average number of shares used  
   in computing diluted net earnings  
   per share    35,542,326    38,676,762    35,278,880    38,806,070  

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  Ceragon Reports Third Quarter 2009 Results

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

September 30,
2009
 December 31,
2008
 
     ASSETS            
   
 CURRENT ASSETS:  
   Cash and cash equivalents   $ 39,546   $ 28,224  
   Short-term bank deposits    36,557    35,044  
   Marketable securities    7,819    2,187  
   Trade receivables, net    56,970    70,811  
   Deferred taxes    3,268    4,082  
   Other accounts receivable and prepaid expenses    9,368    11,508  
   Inventories    50,170    40,113  
   
 Total current assets     203,698   $ 191,969  
   
 LONG-TERM INVESTMENTS:  
   Long-term bank deposits    7,846    8,204  
   Long-term marketable securities    7,999    24,102  
   Severance pay funds    4,848    4,065  
   Deferred taxes    8,821    8,007  
   
 Total long-term investments    $ 29,514   $ 44,378  
   
 PROPERTY AND EQUIPMENT, NET    10,322    8,891  
   
 Total assets    $ 243,534   $ 245,238  
   
     LIABILITIES AND SHAREHOLDERS' EQUITY  
   
 CURRENT LIABILITIES:  
   Trade payables    34,893    41,748  
   Deferred revenues    13,983    5,886  
   Other accounts payable and accrued expenses    8,113    8,041  
   
 Total current liabilities    $ 56,989   $ 55,675  
   
 LONG-TERM LIABILITIES  
   Accrued severance pay   $ 7,050   $ 6,647  
   
 SHAREHOLDERS' EQUITY:  
   Share capital:  
   Ordinary shares    91    91  
   Additional paid-in capital    288,215    285,141  
   Treasury shares at cost    (15,963 )  (7,923 )
   Other comprehensive income    211    193  
   Accumulated deficits    (93,059 )  (94,586 )
   
 Total shareholders' equity    $ 179,495   $ 182,916  
   
 Total liabilities and shareholders' equity    $ 243,534   $ 245,238  

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  Ceragon Reports Third Quarter 2009 Results

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

Three months ended
September 30,
 Nine months ended
September 30,
2009
 2008
 2009
 2008
 
Cash flow from operating activities:                    
   Net income   $ 1,079   $ 3,482   $ 1,527   $ 23,239  
   Adjustments to reconcile net income to net cash  
   used in operating activities:  
   
   Depreciation    852    529    2,323    1,385  
   Stock-based compensation expense    696    665    2,290    1,963  
   Decrease (increase) in trade and other  
   receivables, net    (5,348 )  (6,020 )  15,889    (23,619 )
   Increase in inventory    (8,002 )  (2,530 )  (10,057 )  (2,693 )
   Increase (decrease) in trade payables and accrued  
   liabilities    7,378    5,514    (5,330 )  9,211  
   Increase (decrease) in deferred revenues    7,932    2,823    8,097    (1,073 )
   Decrease (increase) in deferred tax asset    -    95    -    (11,112 )
   Decrease in long term payable    -    -    -    (4,650 )
   Other adjustments    (183 )  (15 )  (416 )  145  
   Net cash provided by (used in) operating activities     $ 4,404   $ 4,543   $ 14,323   $ (7,204 )
   
Cash flow from investing activities:   
 Purchase of property and equipment ,net    (1,323 )  (1,179 )  (5,097 )  (3,018 )
 Investment in short and long-term bank deposit    (8,840 )  (19,569 )  (27,795 )  (53,144 )
 Proceeds from short and long-term bank deposits    6,334    8,820    26,893    47,835  
 Investment in held-to-maturity marketable securities    -    (744 )  (1,500 )  (14,744 )
 Proceeds from maturities of held-to-maturity  
   marketable securities    -    2,000    11,754    6,050  
   Net cash provided by (used in) investing activities     $ (3,829 ) $ (10,672 ) $ 4,255   $ (17,021 )
   
Cash flow from financing activities:   
   Proceeds from exercise of options    569    316    784    591  
   Purchase of treasury shares at cost    -    -    (8,040 )  -  
   Issuance costs    -    (41 )  -    (372 )
   Net cash provided by (used in) financing activities     $ 569   $ 275   $ (7,256 ) $ 219  
   
Increase (decrease) in cash and cash equivalents     $ 1,144   $ (5,854 ) $ 11,322   $ (24,006 )
   
Cash and cash equivalents at the beginning of the  
period    38,402    40,498    28,224    58,650  
Cash and cash equivalents at the end of the period     $ 39,546   $ 34,644   $ 39,546   $ 34,644  

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  Ceragon Reports Third Quarter 2009 Results

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

Three months ended September 30,
2009
 2008
GAAP (as
reported)
 Adjustments (*)
 Non-GAAP
 Non-GAAP
 
   Revenues     $ 44,715        $ 44,715   $ 58,097  
   Cost of revenues    30,499    62    30,437    39,719  
   
 Gross profit    14,216         14,278    18,378  
   
 Operating expenses:  
   Research and development    4,720    148    4,572    4,982  
   Selling and marketing    6,973    241    6,732    7,938  
   General and administrative    1,847    245    1,602    1,551  
   
 Total operating expenses    $ 13,540        $ 12,906   $ 14,471  
   
 Operating profit    676         1,372    3,907  
 Financial income, net    446         446    490  
   
 Income before taxes    1,122         1,818    4,397  
   
 Taxes on income    43         43    159  
   
 Net income   $ 1,079        $ 1,775   $ 4,238  
   
 Basic net earnings per share   $ 0.03        $ 0.05   $ 0.11  
   
 Diluted net earnings per share   $ 0.03        $ 0.05   $ 0.11  
   
 Weighted average number of shares used in  
   computing basic net earnings per share    34,178,001         34,178,001    37,020,035  
   
 Weighted average number of shares used in  
   computing diluted net earnings per share    35,542,326         35,542,326    38,676,762  
   
Total adjustments          696            

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

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  Ceragon Reports Third Quarter 2009 Results

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

Nine months ended September 30,
2009
 2008
GAAP (as
reported)
 Adjustments(*)
 Non-GAAP
 Non-GAAP
 
 Revenues     $ 130,863        $ 130,863   $ 160,499  
 Cost of revenues    88,263    186    88,077    106,600  
   
 Gross profit    42,600         42,786    53,899  
   
 Operating expenses:  
   Research and development    14,377    473    13,904    14,656  
   Selling and marketing    22,119    869    21,250    22,492  
   General and administrative    5,649    762    4,887    4,462  
   
 Total operating expenses    $ 42,145        $ 40,041   $ 41,610  
   
 Operating profit (loss)    455         2,745    12,289  
 Financial income, net    1,268         1,268    2,115  
   
 Income before taxes    1,723         4,013    14,404  
   
 Taxes on income    196         196    409  
   
 Net Income   $ 1,527        $ 3,817   $ 13,995  
   
 Basic net earnings per share   $ 0.04        $ 0.11   $ 0.38  
   
 Diluted net earnings per share   $ 0.04        $ 0.11   $ 0.36  
   
 Weighted average number of shares used in  
   computing basic net earnings per share    34,407,042         34,407,042    36,980,039  
   
 Weighted average number of shares used in  
   computing diluted net earnings per share    35,278,880         35,278,880    38,806,070  
   
Total adjustments          2,290            

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

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Ceragon Reports Third Quarter 2009 Results

Contact: Yoel Knoll
Director of Investor Relations
Ceragon Networks Ltd.
Cell (Int'l): +972 (0) 52 830 6419
Office (Int'l): +972 (0)3 766 6419
yoell@ceragon.com

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