Ceragon Networks Ltd. (NASDAQ: [ CRNT ]), the #1 wireless backhaul specialist today reported results for the fourth quarter which ended December 31, 2011.

Revenues for the fourth quarter of 2011 reached $118.5 million, up 77% from $67.0 million for the fourth quarter of 2010, and up 2% from $116.1 million in the third quarter of 2011.

Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the fourth quarter of 2011 was ($8.2) million or $(0.23) per basic share and diluted share, compared to net income of $3.8 million in the fourth quarter of 2010, or $0.11 per basic share and $0.10 per diluted share.

On a non-GAAP basis, net income for the fourth quarter, excluding (a) $2.0 million of equity-based compensation expenses, and (b) $8.4 million charges related to the Nera acquisition and integration plan, was $2.3 million, or $0.06 per basic share and diluted share. Non-GAAP net income for the fourth quarter of 2010 was $6.1 million, or $0.17 per basic and diluted share (please refer to the accompanying financial tables for reconciliation of GAAP financial information to non-GAAP).

Revenues for the full year of 2011 were $445.3 million, up 78% from $249.9 million in 2010. Net loss on a GAAP basis for 2011 was $(53.7) million or $(1.49) per basic share and diluted share. Net income for the year 2010 was $14.1 million or $0.40 per basic share and $0.38 per diluted share.

On a non-GAAP basis, net income for 2011, excluding (a) $6.6 million of equity-based compensation expenses, and (b) $47.5 million charges related to the Nera acquisition and integration plan, was $400,000 or $0.01 per basic share and diluted share. Net income for the year 2010 was $20.2 million, or $0.58 per basic share and $0.55 per diluted share.

Gross margin on a GAAP basis in the fourth quarter of 2011 was 29.0% of revenues. Gross margin on a non-GAAP basis in the fourth quarter was 33.0% of revenues.

Operating loss on a GAAP basis in the fourth quarter of 2011 was ($7.0) million. On a non-GAAP basis operating income in the fourth quarter of 2011 was $3.4 million.

Cash and cash investments at the end of the quarter were $49.5 million.

"As a result of our continued strong execution, we reported higher revenues, gross margin and profitability for the fourth quarter," said Ira Palti, President and CEO of Ceragon. "I am delighted to report that the integration of the Nera business is complete. We believe our decision to seize the first-mover advantage in the latest round of industry consolidation, combined with the rapid integration, positions us to continue to grow and to gain market share as the #1 wireless backhaul specialist.

"We expect revenues in Q1 to be similar to the fourth quarter, as macroeconomic and political concerns weigh on operators' plans in several regions," continued Mr. Palti. "We have recently added new customers and, with other tangible reasons to expect bookings to increase, our outlook for the year continues to call for moderate growth of 10-12% for 2012. With improvement as the year progresses, our goal is to exit 2012 with gross margin in the mid-30's and a non-GAAP operating margin of 8%-9%."

Supplemental revenue breakouts:

Geographical breakdown, fourth quarter of 2011:

Europe: 24%
Africa: 21%
North America: 8%
Latin America: 21%
India: 10%
APAC: 16%

A conference call will follow, beginning at 9:00 a.m. EST. Investors are invited to join the Company's teleconference by calling (800) 398-9402, or international +1(612) 332-0720 from 8:50 a.m. EST. 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: (USA) (800) 475-6701 (International) +1(320)-365-3844, Access Code: 231788.

A replay of both the call and the webcast will be available through March 28, 2012.

About Ceragon Networks Ltd.

Ceragon Networks Ltd. (NASDAQ: [ CRNT ]) is the #1 wireless backhaul specialist. Ceragon's high capacity wireless backhaul solutions enable cellular operators and other wireless service providers to deliver 2G/3G and LTE/4G voice and data services that enable smart-phone applications such as Internet browsing, music and video. With unmatched technology and cost innovation, Ceragon's advanced point-to-point microwave systems allow wireless service providers to evolve their networks from circuit-switched and hybrid concepts to all IP networks. Ceragon solutions are designed to support all wireless access technologies, delivering more capacity over longer distances under any given deployment scenario. Ceragon's solutions are deployed by more than 230 service providers of all sizes, and hundreds of private networks in more than 130 countries. Visit Ceragon at [ http://www.ceragon.com ].

Ceragon Networks® is a registered trademark of Ceragon Networks Ltd. in the United States and other countries.

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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. Some of the factors that could significantly impact the forward-looking statements in this press release include the risk of significant expenses in connection with potential contingent tax liability associated with Nera's prior operations or facilities, the risk that the combined Ceragon and Nera business may not perform as expected, and other risks and uncertainties, which 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. Ceragon's public filings are available from the Securities and Exchange Commission's website at [ http://www.sec.gov ] or may be obtained on Ceragon's website at [ http://www.ceragon.com ].

Use of non-GAAP Measures:

This press release provides financial measures that exclude certain items and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these Non-GAAP financial measures provide meaningful supplemental information regarding our performance. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when evaluating the business internally and therefore felt it is important to make these non-GAAP adjustments available to investors

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)

 Three months ended Year ended December 31 December 31, 2011 2010 2011 2010 Revenues $ 118,487 $ 66,983 $ 445,269 $ 249,852 Cost of revenues 84,096 42,225 323,191 160,470 Gross profit 34,391 24,758 122,078 89,382 Operating expenses: Research and development, net 12,534 6,732 50,456 25,115 Selling and marketing 20,540 9,641 81,716 37,179 General and administrative 8,337 3,612 26,524 12,328 Restructuring costs - - 7,834 - Acquisition related costs - 775 4,919 775 Total operating expenses $ 41,411 $ 20,760 $ 171,449 $ 75,397 Operating profit (loss) (7,020) 3,998 (49,371) 13,985 Financial income (expenses), net (1,024) 124 (2,024) 1,255 Income (loss) before taxes (8,044) 4,122 (51,395) 15,240 Taxes on income 123 304 2,259 1,178 Net Income (loss) $ (8,167) $ 3,818 $ (53,654) $ 14,062 Basic net earnings (loss) per share $ (0.23) $ 0.11 $ (1.49) $ 0.40 Diluted net earnings (loss) per share $ (0.23) $ 0.10 $ (1.49) $ 0.38 Weighted average number of shares used in computing basic net earnings (loss) per share 36,241,106 35,106,882 35,975,434 34,854,657 Weighted average number of shares used in computing diluted net earnings (loss) per share 36,241,106 36,995,821 35,975,434 36,564,830

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

(Unaudited)

 December 31, December 31, 2011 2010 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 28,991 $ 37,725 Short-term bank deposits 7,159 23,357 Marketable securities 9,665 7,363 Trade receivables, net 143,247 88,074 Deferred taxes, net 6,874 4,057 Other accounts receivable and prepaid expenses 37,281 15,425 Inventories 93,465 65,921 Total current assets 326,682 241,922 LONG-TERM INVESTMENTS: Long-term marketable securities 3,716 13,088 Severance pay funds and pension 6,360 6,039 Total long-term investments 10,076 19,127 OTHER ASSETS: Long-term receivables 5,257 - Deferred taxes, net 10,266 8,829 Goodwill and intangible assets, net 28,032 1,093 Total other assets 43,555 9,922 PROPERTY AND EQUIPMENT, NET 30,573 16,211 Total assets $ 410,886 $ 287,182 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long term loan $ 8,232 $ - Trade payables 77,395 40,537 Deferred revenues 38,308 20,661 Other accounts payable and accrued expenses 47,309 13,215 Total current liabilities 171,244 74,413 LONG-TERM LIABILITIES Long term bank loan, net of current maturities 26,768 - Accrued severance pay and pension 11,996 8,600 Other long term payables 39,827 - Total Long-Term Liabilities 78,591 8,600 SHAREHOLDERS' EQUITY: Share capital: Ordinary shares 97 95 Additional paid-in capital 311,911 300,875 Treasury shares at cost (20,091) (20,091) Other comprehensive income (loss) (343) 159 Accumulated deficits (130,523) (76,869) Total shareholders' equity 161,051 204,169 Total liabilities and shareholders' equity $ 410,886 $ 287,182

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars, in thousands)

(Unaudited)

 Three months ended Year ended December 31, December 31, 2011 2010 2011 2010 Cash flow from operating activities: Net income (loss) $ (8,167) $ 3,818 $ (53,654) $ 14,062 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 4,497 1,321 14,393 4,712 Stock-based compensation expense 2,031 1,541 6,564 4,207 Decrease (Increase) in trade and other receivables, net 6,930 (25,744) 3,440 (27,229) Decrease (Increase) in inventory, net of write off 7,617 (4,071) 40,643 4 Increase (decrease) in trade payables and accrued liabilities (4,756) 20,084 (20,650) (8,323) Increase (decrease) in deferred revenues (42) 7,902 (11,925) 2,113 Increase in deferred tax asset, net (1,269) (114) (1,237) (469) Other adjustments 595 191 2,301 226 Net cash provided by (used in) operating activities $ 7,436 $ 4,928 $ (20,125) $ (10,697) Cash flow from investing activities: Purchase of property and equipment ,net (4,696) (2,083) (14,447) (9,798) Payment for business acquisition *) - - (42,405) (1,232) Investment in short and long-term bank deposit - (1,972) (7,304) (13,754) Proceeds from short and long-term bank deposits 2,368 6,580 25,664 31,680 Investment in held-to-maturity marketable securities - - - (18,339) Proceeds and maturities of held-to-maturity and available-for-sale marketable securities 201 9,091 10,459 16,591 Net cash provided by (used in) investing activities $ (2,127) $ 11,616 $ (28,033) $ 5,148 Cash flow from financing activities: Proceeds from exercise of options 518 1,635 4,474 4,935 Long term bank loan raised in connection with business acquisition - - 35,000 - Net cash provided by financing activities $ 518 $ 1,635 $ 39,474 $ 4,935 Translation adjustments on cash and cash equivalents $ 223 $ - $ (50) $ - Increase (Decrease) in cash and cash equivalents $ 6,050 $ 18,179 $ (8,734) $ (614) Cash and cash equivalents at the beginning of the period 22,941 19,546 37,725 38,339 Cash and cash equivalents at the end of the period $ 28,991 $ 37,725 $ 28,991 $ 37,725 *) Excluding cash and cash equivalents

RECONCILIATION OF NON-GAAP FINANCIAL RESULTS

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

(Unaudited)

 Three months ended December 31, 2011 2010 GAAP Adjustments Non-GAAP Non-GAAP (as reported) Revenues $ 118,487 $ 118,487 $ 66,983 Cost of revenues 84,096 4,740 (a) 79,356 42,142 Gross profit 34,391 39,131 24,841 Operating expenses: Research and development, net 12,534 626 (b) 11,908 6,471 Selling and marketing 20,540 2,604 (c) 17,936 9,402 General and administrative 8,337 2,465 (d) 5,872 2,654 Total operating expenses $ 41,411 $ 35,716 $ 18,527 Operating profit (loss) (7,020) 3,415 6,314 Financial income (expenses), net (1,024) (1,024) 124 Income (loss) before taxes (8,044) 2,391 6,438 Taxes on income 123 123 304 Net income (loss) $ (8,167) $ 2,268 $ 6,134 Basic net earnings (loss) per share $ (0.23) $ 0.06 $ 0.17 Diluted net earnings (loss) per share $ (0.23) $ 0.06 $ 0.17 Weighted average number of shares used in computing basic net earnings (loss) per share 36,241,106 36,241,106 35,106,882 Weighted average number of shares used in computing diluted net earnings (loss) per share 36,241,106 37,504,556 36,995,821 Total adjustments 10,435

a. Cost of revenues includes $0.4 million of amortization of purchased intangible assets, $2.8 million of inventory step-up, $0.1 million of stock based compensation expenses and $1.5 million of integration plan related costs in the three months ended December 31, 2011.

b. Research and development expenses include $0.2 million of integration plan related costs and $0.4 million of stock based compensation expenses in the three months ended December 31, 2011.

c. Selling and marketing expenses includes $1.1 million of amortization of purchased intangible assets, $0.8 million of integration plan related costs and $0.7 million of stock based compensation expenses in the three months ended December 31, 2011.

d. General and administration expenses includes $1.6 million of integration plan related costs and $0.8 million of stock based compensation expenses in the three months ended December 31, 2011.

RECONCILIATION OF NON-GAAP FINANCIAL RESULTS

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

(Unaudited)

 Year ended December 31, 2011 2010 GAAP Adjustments Non-GAAP Non-GAAP (as reported) Revenues $ 445,269 $ 445,269 $ 249,852 Cost of revenues 323,191 22,207 (a) 300,984 160,155 Gross profit 122,078 144,285 89,697 Operating expenses: Research and development, net 50,456 4,031 (b) 46,425 23,151 Selling and marketing 81,716 10,030 (c) 71,686 36,002 General and administrative 26,524 5,040 (d) 21,484 10,427 Restructuring costs 7,834 7,834 - - Acquisition related costs 4,919 4,919 - - Total operating expenses $ 171,449 $ 139,595 69,580 Operating profit (loss) (49,371) 4,690 20,117 Financial income (expenses), net (2,024) (2,024) 1,255 Income (loss) before taxes (51,395) 2,666 21,372 Taxes on income 2,259 2,259 1,178 Net income (loss) $ (53,654) $ 407 $ 20,194 Basic net earnings (loss) per share $ (1.49) $ 0.01 $ 0.58 Diluted net earnings (loss) per share $ (1.49) $ 0.01 $ 0.55 Weighted average number of shares used in computing basic net earnings (loss) per share 35,975,434 35,975,434 34,854,657 Weighted average number of shares used in computing diluted net earnings (loss) per share 35,975,434 37,522,665 36,564,830 Total adjustments 54,061

a. Cost of revenues includes $1.2 million of amortization of purchased intangible assets, $15.4 million of inventory step-up, $0.3 million of stock based compensation expenses and $5.3 million of integration plan related costs in the year ended December 31, 2011.

b. Research and development expenses include $2.5 million of integration plan related costs and $1.5 million of stock based compensation expenses in the year ended December 31, 2011.

c. Selling and marketing expenses includes $3.0 million of amortization of purchased intangible assets, $4.6 million of integration plan related costs and $2.5 million of stock based compensation expenses in the year ended December 31, 2011.

d. General and administration expenses include $2.7 million of integration plan related costs and $2.3 million of stock based compensation expenses in the year ended December 31, 2011.

RECONCILIATION BETWEEN REPORTED AND NON-GAAP

OPERATING PROFIT (LOSS)

(U.S. dollars in thousands)

(Unaudited)

 Three months ended Year ended December 31, 2011 Reported GAAP net operating loss (7,020) (49,371) Stock based compensation expenses 2,031 6,564 Amortization of purchased intangible assets 1,457 4,162 Inventory step up 2,815 15,442 Integration plan related costs 4,132 15,140 Restructuring costs - 7,834 Acquisition related costs - 4,919 Non-GAAP net operating profit 3,415 4,690

Company and Investor Contact:
Yoel Knoll
Vice President of Investor Relations
Ceragon Networks Ltd.
Cell (Int'l): +972-(0)-52-830-6419
Office (Int'l): +972-(0)-3-5431-132
Office (US): +1-(201)-406-1037
Tel. +1-(201)-853-0228
[ yoelk@ceragon.com ]

Media Contact:
Abigail Levy-Gurwitz
Ceragon Networks Ltd.
Tel: +1-(201)-853-0271
[ abigaill@ceragon.com ]

Media Contact:
Karen Quatromoni
Rainier Communications
Tel. +1-508-475-0025 x150
[ kquatromoni@rainierco.com ]

SOURCE Ceragon Networks Ltd

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Ceragon Networks Reports Fourth Quarter and Year-End 2011 Financial Results

Ceragon Networks Reports Fourth Quarter and Year-End 2011 Financial Results

Full year revenues reach a record $445.3 million; improves gross margin and profitability quarter over quarter