Exhibit Number
|
Description
|
23.1
|
Consent of Independent Registered Public Accounting Firm.
|
99.1
|
Unaudited financial statements of Ceragon Networks, Ltd. for the nine months ended September 30, 2013.
|
99.2
|
Operating and Financial Review and Prospects. for the nine months ended September 30, 2013.
|
99.3
|
English summary of the material terms of an amendment, effective as of October 1, 2013, to the Registrant’s Credit Facility, dated March 14, 2013.
|
101
|
Interactive Data File relating to the materials in this report on Form 6-K is formatted in Extensible Business Reporting Language (XBRL).
|
CERAGON NETWORKS, LTD.
(Registrant)
|
|||
Date: November 19, 2013
|
By:
|
/s/ Donna Gershowitz | |
Name: Donna Gershowitz
|
|||
Title: VP and General Counsel
|
|||
Tel-Aviv
November 19, 2013
|
Kost Forer Gabbay & Kasierer
A Member of Ernst & Young Global
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Page
|
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F-2 - F-3
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
|
F-8 - F-16
|
Nine months ended
September 30,
|
||||||||
2012
|
2013
|
|||||||
Unaudited
|
||||||||
Revenues
|
$ | 339,802 | $ | 272,280 | ||||
Cost of revenues
|
236,552 | 187,792 | ||||||
Gross profit
|
103,250 | 84,488 | ||||||
Operating expenses:
|
||||||||
Research and development, net
|
35,480 | 32,553 | ||||||
Selling and marketing
|
58,762 | 50,637 | ||||||
General and administrative
|
20,594 | 18,668 | ||||||
Total
operating expenses
|
$ | 114,836 | $ | 101,858 | ||||
Operating loss
|
11,586 | 17,370 | ||||||
Financial expenses, net
|
2,609 | 8,856 | ||||||
Loss before taxes on income
|
14,195 | 26,226 | ||||||
Taxes on income
|
796 | 5,875 | ||||||
Net loss
|
$ | 14,991 | $ | 32,101 | ||||
Net loss per share:
|
||||||||
Basic and diluted net loss per share
|
$ | 0.41 | $ | 0.87 | ||||
Weighted average number of ordinary shares used in computing basic and diluted net loss per share
|
36,397,410 | 36,736,417 |
Nine months ended September
|
||||||||
2012
|
2013
|
|||||||
Unaudited
|
||||||||
Net loss
|
$ | 14,991 | $ | 32,101 | ||||
Other comprehensive loss:
|
||||||||
Change in foreign currency translation adjustment
|
778 | 1,023 | ||||||
Available-for-sale investments:
|
||||||||
Change in net unrealized (gains) losses
|
191 | (161 | ) | |||||
Reclassification adjustment for net losses included in net income
|
57 | 97 | ||||||
Net change
|
248 | (64 | ) | |||||
Cash flow hedges:
|
||||||||
Change in net unrealized gains
|
(348 | ) | (882 | ) | ||||
Reclassification adjustment for net (gains) losses included in net income
|
(165 | ) | 705 | |||||
Net change (net of tax effect of $185, and $24)
|
(513 | ) | (177 | ) | ||||
Other comprehensive loss
|
513 | 782 | ||||||
Total of comprehensive loss
|
$ | 15,504 | $ | 32,883 |
Ordinary shares
|
Share
capital
|
Additional
paid-in
capital
|
Treasury shares at cost
|
Accumulated other comprehensive income (loss)
|
Accumulated deficit
|
Total shareholders' equity
|
||||||||||||||||||||||
Balance as of January 1, 2012
|
36,324,997 | $ | 97 | $ | 311,911 | $ | (20,091 | ) | $ | (343 | ) | $ | (130,523 | ) | $ | 161,051 | ||||||||||||
Exercise of options
|
240,171 | 1 | 735 | - | - | - | 736 | |||||||||||||||||||||
Share-based compensation expense
|
- | - | 5,460 | - | - | - | 5,460 | |||||||||||||||||||||
Other comprehensive loss, net
|
- | - | - | - | (147 | ) | - | (147 | ) | |||||||||||||||||||
Net loss
|
- | - | - | - | - | (23,391 | ) | (23,391 | ) | |||||||||||||||||||
Balance as of December 31, 2012
|
36,565,168 | 98 | 318,106 | (20,091 | ) | (490 | ) | (153,914 | ) | 143,709 | ||||||||||||||||||
Exercise of options (unaudited)
|
292,000 | - | 1,145 | - | - | - | 1,145 | |||||||||||||||||||||
Share-based compensation expense (unaudited)
|
- | - | 2,774 | - | - | - | 2,774 | |||||||||||||||||||||
Other comprehensive loss, net (unaudited)
|
- | - | - | - | (782 | ) | - | (782 | ) | |||||||||||||||||||
Net loss (unaudited)
|
- | - | - | - | - | (32,101 | ) | (32,101 | ) | |||||||||||||||||||
Balance as of September 30, 2013 (
unaudited
)
|
36,857,168 | 98 | 322,025 | (20,091 | ) | (1,272 | ) | (186,015 | ) | 114,745 |
Nine months ended
September 30,
|
||||||||
2012
|
2013
|
|||||||
Unaudited
|
||||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$ | (14,991 | ) | $ | (32,101 | ) | ||
Adjustments required to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
11,228 | 11,656 | ||||||
Share-based compensation expense
|
4,245 | 2,774 | ||||||
Accrued severance pay and pensions, net
|
(59 | ) | (3 | ) | ||||
Decrease in accrued interest, exchange rate on bank deposits,
|
||||||||
accrued interest and amortization of premium on marketable securities
|
(187 | ) | (19 | ) | ||||
Decrease (increase) in trade receivables, net
|
(37,096 | ) | 20,502 | |||||
Increase in other accounts receivable and prepaid expenses
|
(2,425 | ) | (168 | ) | ||||
Decrease in inventories, net of write-off
|
28,809 | 7,493 | ||||||
Increase (decrease) in trade payables
|
23,443 | (17,472 | ) | |||||
Decrease in deferred revenues
|
(16,419 | ) | (8,218 | ) | ||||
Decrease (increase) in deferred tax asset, net
|
(419 | ) | 3,743 | |||||
Decrease in other accounts payable and accrued expenses (including other long term liabilities)
|
(6,005 | ) | (1,597 | ) | ||||
Net cash used in operating activities
|
(9,876 | ) | (13,410 | ) | ||||
Cash flows from investing activities
:
|
||||||||
Purchase of property and equipment
|
(10,213 | ) | (11,706 | ) | ||||
Investment in short-term bank deposits
|
(1,266 | ) | (255 | ) | ||||
Proceeds from maturities of short-term bank deposits
|
7,920 | 336 | ||||||
Proceeds from sale of marketable securities, net
|
9,717 | 301 | ||||||
Net cash provided by (used in) investing activities
|
6,158 | (11,324 | ) |
NOTE 1:-
|
GENERAL
|
a.
|
Ceragon Networks Ltd. ("the Company") is a high-capacity wireless hauling specialist. It provides wireless hauling solutions that enable cellular operators and other wireless service providers to deliver voice and data services, enabling smart-phone applications such as Internet browsing, social networking applications, image sharing, music and video applications. Its wireless backhaul solutions use microwave technology to transfer large amounts of telecommunication traffic between base stations and small-cells and the core of the service provider’s network. The Company also provides fronthaul solutions that use microwave technology for ultra-high speed, ultra-low latency communication between LTE/LTE-Advanced base stations and remote radio heads.
|
b.
|
During the fourth quarter of 2012, the Company initiated a restructuring plan to improve its operating efficiency. The restructuring expenses include mainly severance and other compensation related expenses associated with the termination of employment under a restructuring plan and office lease termination costs. The total restructuring costs associated with exiting activities of the Company for the year ended December 31, 2012 were $ 4,608 recorded in operating expenses, as restructuring costs. As of December 31, 2012 and September 30, 2013, the total liability balance for the restructuring plan was $ 3,712 and $ 1,231, respectively.
|
c.
|
During the fourth quarter of 2013, the Company initiated a restructuring plan to reduce its operating cost and improve its efficiency, mainly by realigning teams on enhancing the newly released IP-20 platform, consolidating or relocating certain offices and reducing staff functions and some operations positions, as well as other measures. The restructuring expenses include mainly severance and other compensation related expenses associated with the termination of employment under a restructuring plan and facilities related expenses for office closing and consolidations.
|
d.
|
ASC No. 740 "Income Taxes" requires that a valuation allowance be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
|
NOTE 1:-
|
GENERAL (Cont.)
|
e.
|
In March 2013, the Company entered into a syndicated credit agreement (the “Credit Facility”) with four financial institutions. Such agreement provides the Company with revolving credit facilities in the form of loans and bank guarantees, under which an aggregate sum of up to $73.5 million of credit loans and up to $40.2 million of bank guarantees shall be available. The Credit Facilities shall terminate, and all borrowings shall be repaid, upon March 14, 2016. Repayment may be accelerated by the financial institutions in certain events of default including in insolvency events, failure to comply with financial covenants or an event in which a current or future shareholder acquires control (as defined under the Israel Securities Law) of the Company. The financial covenants are mainly based on financial ratios that are related to the Company's total shareholders' equity, financial debt, trade receivables balance and working capital (see also note 8). As of September 30, 2013 the outstanding Credit Facility is $91.6 million, under which $61.6 million are credit loans and $30.0 are bank guarantees.
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NOTE 2:-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
a.
|
The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2012 are applied consistently in these financial statements
.
For further information, refer to the consolidated financial statements as of December 31, 2012.
|
b.
|
Basis of Consolidation
|
NOTE 3:-
|
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
|
NOTE 4:-
|
FAIR VALUE MEASURMENTS
|
NOTE 4:-
|
FAIR VALUE MEASURMENTS (Cont.)
|
NOTE 4:-
|
FAIR VALUE MEASURMENTS (Cont.)
|
As of December 31, 2012
|
||||||||||||||||
Fair value measurements using input type
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Marketable securities
|
$ | 4,068 | $ | - | $ | - | $ | 4,068 | ||||||||
Derivatives designated as hedging instrument
|
- | 533 | - | 533 | ||||||||||||
Pension liability, net
|
- | - | (2,247 | ) | (2,247 | ) | ||||||||||
Total assets (liabilities)
|
$ | 4,068 | $ | 533 | $ | (2,247 | ) | $ | 2,354 | |||||||
As of September 30, 2013
|
||||||||||||||||
Fair value measurements using input type
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Marketable securities
|
$ | 3,923 | $ | - | $ | - | $ | 3,923 | ||||||||
Derivatives designated as hedging instrument
|
- | 506 | - | 506 | ||||||||||||
Pension liability, net
|
- | - | (2,142 | ) | (2,142 | ) | ||||||||||
Total assets (liabilities)
|
$ | 3,923 | $ | 506 | $ | (2,142 | ) | $ | 2,287 |
December 31, 2012
|
September 30, 2013
|
|||||||||||||||||||||||
Amortized
|
Gross
unrealized
|
Fair
market
|
Amortized
|
Gross
unrealized
|
Fair
market
|
|||||||||||||||||||
Cost
|
gains
|
value
|
cost
|
gains
|
value
|
|||||||||||||||||||
Corporate debentures
|
$ | 204 | $ | 99 | $ | 303 | $ | - | $ | - | $ | - | ||||||||||||
Government bonds
|
3,515 | 250 | 3,765 | 3,519 | 404 | 3,923 | ||||||||||||||||||
$ | 3,719 | $ | 349 | $ | 4,068 | $ | 3,519 | $ | 404 | $ | 3,923 |
NOTE 6:-
|
INVENTORIES
|
December 31,
|
September 30,
|
|||||||
2012(*) | 2013 | |||||||
Unaudited
|
||||||||
Raw materials
|
$ | 14,268 | $ | 13,421 | ||||
Work in progress
|
2,633 | 404 | ||||||
Finished products
|
48,653 | 43,613 | ||||||
$ | 65,554 | $ | 57,438 |
NOTE 7:-
|
GOODWILL
|
January 1, 2012
|
$ | 14,593 | ||
Functional currency translation adjustments (1) (2) (3)
|
690 | |||
December 31, 2012
|
$ | 15,283 | ||
Functional currency translation adjustments (3)
|
(222 | ) | ||
September 30, 2013
|
$ | 15,061 |
(1)
|
The allocation period of Nera's acquisition ended in July 2012.
|
(2)
|
Adjustment of goodwill related to acquisition of Nera.
|
(3)
|
Foreign currency translation differences resulting from goodwill allocated to subsidiaries,
whose functional currency has been determined to be other than the U.S. dollar and
adjustment related to provisions.
|
NOTE
8:-
|
LOAN AND CREDIT LINE
|
2013
|
$ | 2,058 | ||
2014
|
8,232 | |||
2015
|
8,232 | |||
2016
|
2,072 | |||
$ | 20,594 |
NOTE 9:-
|
COMMITMENTS AND CONTINGENT LIABILITIES
|
a.
|
Lease commitments:
|
Year ended December 31,
|
Facilities
|
Motor vehicles
|
Total
|
|||||||||
2013
|
1,518 | 359 | 1,877 | |||||||||
2014
|
3,024 | 1,140 | 4,164 | |||||||||
2015
|
2,595 | 648 | 3,243 | |||||||||
2016
|
2,450 | 363 | 2,813 | |||||||||
2017 and thereafter
|
2,984 | - | 2,984 | |||||||||
12,571 | 2,510 | 15,081 |
b.
|
Charges and guarantees:
|
c.
|
Litigations:
|
d.
|
Indirect taxes:
|
NOTE 10:-
|
SHAREHOLDERS' EQUITY
|
NOTE 11:-
|
SUBSEQUENT
EVENTS
|
a.
|
The Company initiated a restructuring plan during the fourth quarter of 2013. For details, see note 1c.
|
b.
|
Subsequent to the balance sheet date, the Company signed with the financial institutions on an amendment to the Credit Facility. For details, see note 1e.
|
c.
|
Subsequent to the balance sheet date , and as part of the 2013 Restructuring Plan, The Company’s Board of Directors has authorized a grant of up to 1.2 million RSU’s under our Amended and Restated Share Option and RSU Plan.
|
d.
|
On November 3, 2013, the Company’s Board of Directors approved a grant to employees of options and RSU’s to purchase a total of 144,667 Ordinary Shares. Such options and RSU’s shall vest over a period of 4 years commencing on the above date.
|
Nine months ended
September 30, 2012
|
Nine months ended
September 30, 2013
|
|||||||||||||||
$ | % | $ | % | |||||||||||||
Revenues
|
339,802 | 100 | % | 272,280 | 100 | % | ||||||||||
Cost of revenues
|
236,552 | 69.6 | 187,792 | 69.0 | ||||||||||||
Gross profit
|
103,250 | 30.4 | 84,488 | 31.0 | ||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development, net
|
35,480 | 10.4 | 32,553 | 12.0 | ||||||||||||
Selling and marketing
|
58,762 | 17.3 | 50,637 | 18.6 | ||||||||||||
General and administrative
|
20,594 | 6.1 | 18,668 | 6.8 | ||||||||||||
Total operating expenses
|
114,836 | 33.8 | 101,858 | 37.4 | ||||||||||||
Operating loss
|
(11,586 | ) | (3.4 | ) | (17,370 | ) | (6.4 | ) | ||||||||
Financial expenses, net
|
(2,609 | ) | (0.8 | ) | (8,856 | ) | (3.2 | ) | ||||||||
Taxes on income
|
(796 | ) | (0.2 | ) | (5,875 | ) | (2.2 | ) | ||||||||
Net loss
|
(14,991 | ) | (4.4 | ) | (32,101 | ) | (11.8 | ) |
|
·
|
our net loss of $32.1 million;
|
|
·
|
a $19.1 million decrease in trade payables, net of accrued expenses and other accounts payables; and
|
|
·
|
a $8.2 million decrease in deferred revenues paid in advance.
|
|
·
|
a $7.5 million decrease in inventories, net of write-offs; and
|
|
·
|
a $20.3 million decrease in trade and other receivables, net.
|
|
·
|
our net loss of $15.0 million;
|
|
·
|
a $39.5 million increase in trade and other receivables, net; and
|
|
·
|
a $16.4 million decrease in deferred revenues paid in advance.
|
|
·
|
a $28.8 million decrease in inventories, net of write-offs; and
|
|
·
|
a $17.4 million increase in trade payables, net of accrued expenses and other accounts payables.
|
1.
|
General
.
|
|
i.
|
"
Return Date to Financial Ratio
"- the date the Lenders approved in writing in accordance with the financial statements provided by the Company, that the Company is in compliance with financial ratios stated under section 16 to the Agreement, in its version before its amendment pursuant to the this Amendment.
|
|
ii.
|
"
Termination Date
"- means the earlier of October 1
st
, 2014, or the Return Date to Financial Ratio.
|
|
iii.
|
"
Effective Date
"- means October 1
st
, 2013.
|
2.
|
Financial Ratios
.
|
|
(a)
|
Ratio of equity to total balance sheet shall be equal to or greater than 0.23;
|
|
(b)
|
Equity level of no less than 85
(eighty five)
million US dollars;
|
|
(c)
|
Ratio of net financial debt to the working capital shall be equal to or smaller than 0.5;
|
|
(d)
|
Ratio of net financial debt to the accounts receivables shall be equal to or smaller than 0.4;
|
|
(e)
|
Level of total cash, cash equivalents and short term investments in marketable securities of no less than 25 (twenty five) million US dollars, at all times excluding the first quarter of the year 2014, in which the level of total cash, cash equivalents and short term investments in marketable securities shall be no less than 30 (thirty) million US dollars;
|
|
(f)
|
The adjusted EBITDA (as defined below) for the second quarter of the year 2014 shall be no less than 3 (three) million US dollars; and
|
|
(g)
|
The adjusted EBITDA for the third quarter of the year 2014 shall be no less than 5 (five) million US dollars.
|
3.
|
Interest and Fees
|
|
3.1
|
The principal of each outstanding loan advanced to the Company by a Lender out of the Loan Facilities (as defined under the terms of the Agreement) shall bear floating interest in a rate of the base interest plus applicable spread of up to 3.2% per annum.
|
|
3.2
|
The annual rate with respect to the amount of the calculated fee for each day the Loan Facilities were not used by the Company during the term of the Loan Facilities shall be 1.35% per annum.
|
|
3.3
|
The annual rate with respect to the amount of the calculated fee for each day Bank Guarantees Facilities (as defined under the terms of the Agreement) were not used by the Company during the term of the Guarantees Facilities shall be 0.75% per annum.
|
|
3.4
|
The maximum annual fee for the issuance of a Bank Guarantee by a Lender, as of the Effective Date and until the Termination Date, is amended to the following:
|
|
(i)
|
An amount equal to 1.75% of the Bank Guarantee, if the Bank Guarantee is in the form of a tender, performance or quality guarantee;
|
|
(ii)
|
An amount equal to 2.70% of the Bank Guarantee if the Bank Guarantee is in the form a financial guarantee.
|
|
3.5
|
The Company shall pay each Lender a non-refundable one-time fee in consideration for the handling of the Amendment.
|
4.
|
Further Undertakings
.
|
5.
|
Termination of the Amendment Term
.
|
6.
|
Reservation of Rights
.
|