exhibit_a.htm

Exhibit A

Press Release

Ceragon Reports Third Quarter 2014 – October 30, 2014

CERAGON NETWORKS REPORTS THIRD QUARTER 2014 FINANCIAL RESULTS

Paramus, New Jersey, October 30, 2014 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 high-capacity wireless hauling specialist, today reported results for the third quarter which ended September 30, 2014.

Revenues for the third quarter of 2014 reached $99.0 million, up 8% from $92.1 million for the third quarter of 2013, and up 10% from $90.4 million in the second quarter of 2014.

Gross margin in accordance with US Generally Accepted Accounting Principles (GAAP) in the third quarter of 2014 was 25.6% of revenues, compared to 30.9% of revenues in the third quarter of 2013, and compared to 26.3% of revenues in the second quarter of 2014. Gross margin on a non-GAAP basis was 25.7% of revenues in the third quarter of 2014, compared to 31.9 % of revenues in the third quarter of 2013, and compared to 27.0 % of revenues in the second quarter of 2014.

Operating loss on a GAAP basis in the third quarter of 2014 was $(0.8) million, compared to an operating loss of $(4.1) million in the third quarter of 2013, and compared to an operating income of $11.8 million in the second quarter of 2014. On a non-GAAP basis, the operating profit was $0.1million in the third quarter of 2014, compared to an operating loss of $(2.2) million in the third quarter of 2013, and compared to an operating loss of $(2.6) million in the second quarter of 2014.

Net loss on a GAAP basis for the third quarter of 2014 was $(5.6) million or $(0.08) per basic share and diluted share. Net loss for the third quarter of 2013 was $(10.4) million, or $(0.28) per basic share and diluted share. Net income for the second quarter of 2014 was $8.0 million or $0.15 per basic share and diluted share, primarily due to $16.8 million of non-recurring other income resulting from a settlement agreement with Eltek ASA.

On a non-GAAP basis, net loss for the third quarter of 2014 was $(3.6) million, or $(0.05) per basic share and diluted share, compared to a non-GAAP net loss for the third quarter of 2013 of $(4.5) million, or $(0.12) per basic share and diluted share. The non-GAAP net loss for the second quarter of 2014 was $(5.0) million or $(0.10) per basic share and diluted share.

For reconciliations of GAAP to non-GAAP results, see the attached tables.

“The pickup in revenues and the continued acceleration in bookings during the third quarter were mainly a result of extremely strong demand from India,” said Ira Palti, president and CEO of Ceragon. “We approached breakeven on an operating basis and reported a small non-GAAP operating profit, despite a less favorable geographic revenue mix putting pressure on our gross margin. With improving overall demand and the excellent reception our IP-20 platform is receiving in the market, our primary focus going forward will be on achieving sustainable profitability and positive cash flow.”

Supplemental geographical breakdown of revenue, third quarter of 2014:

Europe:

17%

Africa:

17%

North America:

Latin America:

24%

India:

26%

APAC:

A conference call will follow beginning at 9:00 a.m. EDT. Investors are invited to join the Company’s teleconference by calling (USA) (800) 230-1093 or international +1 (612) 234-9959 from 8:50 a.m. EDT. 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/about-us/ceragon/investor-relations selecting the webcast link, and following the registration instructions.

If you are unable to join us live, the replay numbers are: Telephone: USA: (800) 475-6701; International: +1 (320) 365-3844; Access Code: 338241. A replay of both the call and the webcast will be available through November 30, 2014.

Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Ceragon uses non-GAAP measures of its financial results. Ceragon’s management believes the non-GAAP financial information provided in this release is useful to investors’ understanding and assessment of Ceragon’s ongoing core operations and prospects for the future. Historically, Ceragon has also publicly presented these supplemental non-GAAP financial measures in order to assist the investment community to see the Company “through the eyes of management,” and thereby enhance understanding of its operating performance. 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 statements contained in the tables attached to 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.

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About Ceragon Networks Ltd.

Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 high-capacity wireless hauling specialist. We provide innovative, flexible and cost-effective wireless backhaul and fronthaul solutions that enable mobile operators and other wired/wireless service providers to deliver 2G/3G, 4G/LTE and other broadband services to their subscribers. Ceragon’s high-capacity solutions use microwave technology to transfer voice and data traffic, while maximizing bandwidth efficiency, to deliver more capacity over longer distances under any deployment scenario. Based on our extensive global experience, Ceragon delivers turnkey solutions that support service provider profitability at every stage of the network lifecycle enabling faster time to revenue, cost-effective operation and simple migration to all-IP networks. As the demand for data pushes the need for ever-increasing capacity, Ceragon is committed to serve the market with unmatched technology and innovation, ensuring effective solutions for the evolving needs of the marketplace. Our solutions are deployed by more than 430 service providers in over 130 countries.

Ceragon Networks® and FibeAir® are registered trademarks of Ceragon Networks Ltd. in the United States and other countries. CERAGON ® is a trademark of Ceragon Networks Ltd., registered in various countries. Other names mentioned are owned by their respective holders.

Safe Harbor

This press release contains statements concerning Ceragon’s future prospects that are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include: projections of capital expenditures and liquidity, competitive pressures, revenues, growth prospects, product development, financial resources, restructuring costs, cost savings and other financial matters. You can identify these and other forward-looking statements by the use of words such as “may,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “expects,” “intends,” “potential” or the negative of such terms, or other comparable terminology. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including risks associated with increased working capital needs; risks associated with the ability of Ceragon to meet its liquidity needs; the risk that sales of Ceragon’s new IP-20 products will not meet expectations; risks associated with doing business in Latin America, including currency export controls and recent economic concerns; risks relating to the concentration of our business in the Asia Pacific region and in developing nations; the risk of significant expenses in connection with potential contingent tax liability associated with Nera’s prior operations or facilities; and other risks and uncertainties detailed from time to time in Ceragon’s Annual Report on Form 20-F and Ceragon’s other filings with the Securities and Exchange Commission, and represent our views only as of the date they are made and should not be relied upon as representing our views as of any subsequent date. We do not assume any obligation to update any forward-looking statements.

Investors:			Media:
Doron Arazi	or	Claudia Gatlin	Tanya Solomon
+972 3 5431 660		+1 212 830 9080	+972 3 5431 163
dorona@ceragon.com		claudiag@ceragon.com	tanyas@ceragon.com

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Ceragon Reports Third Quarter 2014 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,
	2014		2013		2014		2013

Revenues	$	99,013	$	92,099	$	259,948	$	272,280
Cost of revenues		73,695		63,610		195,238		187,792

Gross profit		25,318		28,489		64,710		84,488

Operating expenses:
Research and development		7,999		10,065		26,892		32,553
Selling and marketing		12,842		16,296		42,917		50,637
General and administrative		5,267		6,189		16,893		18,668
Restructuring costs		-		-		936		-
Other income		-		-		16,800		-

Total operating expenses	$	26,108	$	32,550	$	70,838	$	101,858

Operating loss		790		4,061		6,128		17,370

Financial expenses, net		3,311		1,980		13,650		8,856

Loss before taxes		4,101		6,041		19,778		26,226

Taxes on income		1,457		4,399		4,745		5,875

Net loss	$	5,558	$	10,440	$	24,523	$	32,101

Basic and diluted net loss per share	$	0.08	$	0.28	$	0.42	$	0.87

Weighted average number of shares used in computing basic and diluted net loss per share		68,047,913		36,815,864		57,711,192		36,736,417

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Ceragon Reports Third Quarter 2014 Results

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

	September 30, 2014			December 31, 2013
	(Unaudited)			(audited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	43,944		$	42,407
Short-term bank deposits		377			446
Marketable securities		4,163			5,499
Trade receivables, net		162,046			131.166
Deferred taxes		5,550			7,198
Other accounts receivable and prepaid expenses		29,390			34,205
Inventories		60,037			64,239
Total current assets		305,507			285,160

NON-CURRENT ASSETS:
Marketable securities		-			3,985
Deferred tax assets, net		4,271			6,542
Severance pay and pension fund		6,306			7,065
Property and equipment, net		34,707			35,245
Intangible assets, net		5,619			7,213
Goodwill		14,855			14,935
Other non-current assets		6,505			5,826
Total long-term assets		72,263			80,811
Total assets	$	377,770		$	365,971

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Short term loan, including current maturities of long term bank loan	$	46,332		$	46,922
Trade payables		84,330			77,979
Deferred revenues		8,560			7,968
Other accounts payable and accrued expenses		37,532			45,526
Total current liabilities		176,754			178,395

LONG-TERM LIABILITIES:
Long term bank loan, net of current maturities		4,130			10,304
Accrued severance pay and pension		12,181			13,635
Other long term payables		27,390			28,559
Total long-term liabilities		43,701			52,498
SHAREHOLDERS' EQUITY:
Share capital:
Ordinary shares		212			141
Additional paid-in capital		405,758			357,989
Treasury shares at cost		(20,091	)		(20,091	)
Other comprehensive loss		(2,649	)		(1,569	)
Accumulated deficits		(225,915	)		(201,392	)

Total shareholders' equity		157,315			135,078

Total liabilities and shareholders' equity	$	377,770		$	365,971

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Ceragon Reports Third Quarter 2014 Results

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars, in thousands)

(Unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Cash flow from operating activities:
Net loss	$	(5,558	)	$	(10,440	)	$	(24,523	)	$	(32,101	)
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization		3,486			3,885			10,394			11,656
Stock-based compensation expense		568			701			2,691			2,774
Decrease (increase) in trade and other receivables, net		(14,918	)		(6,130	)		(28,824	)		20,334
Decrease in inventory, net of write off		1,046			91			4,075			7,493
Increase (decrease) in trade payables and accrued liabilities		7,131			4,604			(1,788	)		(19,069	)
Increase (decrease) in deferred revenues		(455	)		(3,683	)		592			(8,218	)
Decrease in deferred tax asset, net		1,360			3,228			4,004			3,743
Other adjustments		(562	)		299			(291	)		(22	)
Net cash used in operating activities	$	(7,902	)	$	(7,445	)	$	(33,670	)	$	(13,410	)

Cash flow from investing activities:
Purchase of property and equipment		(2,286	)		(4,009	)		(8,464	)		(11,706	)
Investment in short-term bank deposits		-			-			-			(255	)
Proceeds from short-term bank deposits		11			-			69			336
Proceeds from sale of available for sale marketable securities, net		-			-			5,161			301
Net cash provided by investing activities	$	(2,275	)	$	(4,009	)	$	(3,234	)	$	(11,324	)

Cash flow from financing activities:
Proceeds from exercise of options		-			-			-			1,145
Proceeds from issuance of shares, net		45,150			-			45,150			-
Proceeds from bank loans		-			9,300			20,190			25,990
Repayment of bank loans		(22,838	)		(2,058	)		(26,954	)		(8,174	)

Net cash provided by financing activities	$	22,312		$	7,242		$	38,386		$	18,961

Translation adjustments on cash and cash equivalents	$	(66	)	$	(114	)	$	55		$	(744	)
Increase (decrease) in cash and cash equivalents	$	12,069		$	(4,326	)	$	1,537		$	(6,517	)
Cash and cash equivalents at the beginning of the period		31,875			44,908			42,407			47,099
Cash and cash equivalents at the end of the period	$	43,944		$	40,582		$	43,944		$	40,582

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Ceragon Reports Third Quarter 2014 Results

RECONCILIATION OF NON-GAAP FINANCIAL RESULTS

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

(Unaudited)

	Three months ended September 30,
	2014						2013
	GAAP (as reported)			Adjustments	Non-GAAP		Non-GAAP

Revenues	$	99,013			$	99,013	$	92,099
Cost of revenues		73,695		(a) 116		73,579		62,708

Gross profit		25,318				25,434		29,391

Operating expenses:
Research and development		7,999		(b) 376		7,623		9,937
Selling and marketing		12,842		(c) 219		12,623		15,636
General and administrative		5,267		(d) 143		5,124		5,989

Total operating expenses	$	26,108			$	25,370	$	31,562

Operating profit (loss)		(790	)			64		(2,171	)
Financial expenses, net		3,311				3,311		1,980

Loss before taxes		4,101				3,247		4,151

Taxes on income		1,457		(e)1,150		307		362

Net loss	$	5,558			$	3,554	$	4,513

Basic and diluted net loss per share	$	0.08			$	0.05	$	0.12

Weighted average number of shares used in computing basic and diluted net loss per share		68,047,913				68,047,913		36,815,864

Total adjustments				2,004

(a)	Cost of revenues includes $0.3 million of amortization of intangible assets, $50 thousand of stock based compensation expenses and $(0.2) million of changes in pre-acquisition indirect tax positions in the three months ended September 30, 2014.

(b)	Research and development expenses include $0.4 million of stock based compensation expenses in the three months ended September 30, 2014.

(c)	Selling and marketing expenses include $0.2 million of amortization of intangible assets in the three months ended September 30, 2014.

(d)	General and administrative expenses include $0.1 million of stock based compensation expenses in the three months ended September 30, 2014.

(e)	Taxes on income include $1.2 million of non-cash tax adjustments in the three months ended September 30, 2014.

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Ceragon Reports Third Quarter 2014 Results

RECONCILIATION OF NON-GAAP FINANCIAL RESULTS

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

(Unaudited)

	Nine months ended September 30,
	2014							2013
	GAAP (as reported)		Adjustments		Non-GAAP			Non-GAAP

Revenues	$	259,948				$	259,948	$	272,280
Cost of revenues		195,238	(a)1,544				193,694		184,990
Gross profit		64,710					66,254		87,290

Operating expenses:
Research and development		26,892	(b)3,727				23,165		30,565
Selling and marketing		42,917	(c)1,900				41,017		47,899
General and administrative		16,893	(d)1,464				15,429		17,152
Restructuring costs		936		936			-		-
Other income		16,800	(e)16,800				-		-

Total operating expenses	$	70,838				$	79,611	$	95,616

Operating loss		6,128					13,357		8,326
Financial expenses, net		13,650	(f)6,310				7,340		5,723

Loss before taxes		19,778					20,697		14,049

Taxes on income		4,745	(g)3,991				754		1,838

Net loss	$	24,523				$	21,451	$	15,887

Basic and diluted net loss per share	$	0.42				$	0.37	$	0.43
Weighted average number of shares used in computing basic and diluted net loss per share		57,711,192					57,711,192		36,736,417

Total adjustments				3,072

(a)	Cost of revenues includes $0.9 million of amortization of intangible assets, $0.2 million of stock based compensation expenses, $0.3 million of restructuring plan related costs and $0.2 million of changes in pre-acquisition indirect tax positions in the nine months ended September 30, 2014.

(b)	Research and development expenses include $2.4 million of restructuring plan related costs and $1.3 million of stock based compensation expenses in the nine months ended September 30, 2014.

(c)	Selling and marketing expenses include $0.7 million of amortization of intangible assets, $0.7 million of restructuring plan related costs and $0.6 million of stock based compensation expenses in the nine months ended September 30, 2014.

(d)	General and administrative expenses include $0.7 million of restructuring plan related costs and $0.6 million of stock based compensation expenses in the nine months ended September 30, 2014.

(e)	Other income represents net cash received as a result of an agreement with Eltek ASA to settle all claims related to the purchase of Nera from Eltek in January 2011.

(f)	Financial expenses include $4.1 million of currency devaluation in Venezuela and $2.2 million related to certain transactions to expatriate cash from Venezuela and Argentina in the nine months ended September 30, 2014.

(g)	Taxes on income include $4.0 million non-cash tax adjustments in the nine months ended September 30, 2014.

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Ceragon Reports Third Quarter 2014 Results

RECONCILIATION BETWEEN REPORTED AND NON-GAAP

NET LOSS

(U.S. dollars in thousands)

(Unaudited)

	Three months ended			Nine months ended
	September 30, 2014

Reported GAAP net loss		5,558			24,523

Stock based compensation expenses		568			2,691
Amortization of intangible assets		536			1,589
Restructuring plan related costs		-			5,107
Changes in pre-acquisition indirect tax positions		(250	)		184
Currency devaluation in Venezuela		-			4,140
Expenses related to certain transactions to expatriate cash from Venezuela and Argentina		-			2,170
Non-cash tax adjustments		1,150			3,991
Income from settlement agreement with Eltek		-			16,800
Non-GAAP net loss		3,554			21,451

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