Mail Stop 3561
July 12, 2005
Via U.S. Mail and Fax
Mr. Naftali Idan
Chief Financial Officer
24 Raoul Wallenberg Street
Tel-Aviv 69719
Israel
RE: Ceragon Networks Ltd.
Form 20-F for the fiscal year ended December 31, 2004
Filed June 9, 2005
File No. 000-30862
Dear Mr. Idan:
We have reviewed your filing and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and do not intend to expand our review to
other
portions of your document. Please be as detailed as necessary in
your explanations. In our comments we asked you to provide us
with
information so we may better understand your disclosure. After
reviewing this information, we may or may not raise additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 20-F for Fiscal Year Ended December 31, 2004
Note 2: Significant Accounting Policies, page F-8
b. Financial Statements in U.S. dollars: page F-8
1. We note your disclosure that management believes the dollar is
the
functional currency because it is the primary currency in the
economic environment in which the Company and its subsidiaries
operate. Tell us whether management performed an analysis of the
functional currency for each of your eight subsidiaries separately
or
for the Company as a whole. If an analysis was performed for each
subsidiary separately, provide us with more detail in your
response
letter that supports management`s conclusion that the dollar is
the
functional currency for each subsidiary. If the analysis was
performed for the Company as a whole, explain to us why you do not
believe it is necessary to analyze the functional currency for
each
subsidiary separately.
k. Revenue recognition: page F-11
2. We note your disclosure that you sell products indirectly
through
systems integrators, distributors, resellers, and Original
Equipment
Manufacturers. For each of these third parties, tell us whether
you
recognize revenue at the point of delivery to the third party or
at
the point of delivery to the end-user. Reference all pertinent,
authoritative, accounting literature in your response that
supports
your accounting treatment.
Note 8: Commitments and Contingent Liabilities, page F-20
k. Royalties: page F-20
3. We note your disclosure "The Company is obligated to pay
royalties
to the OCS, amounting to 3%-3.5% of the sales of the products and
other related revenues generated from such projects, equal to 100%
of
the grants received". Please tell us in your response letter the
amount of potential royalties that you have accrued as of 12/31/04
and explain to us your consideration of SAFS 5 in making this
determination. In addition, provide us with the factors that you
considered in determining that it is not probable that you will
have
to pay royalties equal to the full amount of the grants received.
Further, please tell us how you account for the interest on the
grants received after January 1, 1999.
Note 9 - Shareholders` equity, page F-22
c. Warrant to supplier, page F-23
4. Tell us how you applied the consensus in EITF 96-18 in
accounting
for the issuance of the warrant to the supplier. Also, tell us
why
as a result of the adoption of SFAS 150 you recognized a non-cash
charge of $3,432 in 2003.
Note 10: Taxes on Income, page F-24
5. We note on page F-27 that you have $69.6 million of accumulated
losses for Israel income tax purposes as of December 31, 2004.
Please tell us in your response letter why you do not have a
deferred
tax asset recorded for these accumulated losses.
* * * *
Please respond to these comments within 10 business days or
tell us when you will provide us with a response. Please furnish
a
letter that keys your responses to our comments and provides any
requested information. Detailed letters greatly facilitate our
review. Please understand that we may have additional comments
after
reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that
* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filings; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of Enforcement
has
access to all information you provide to the staff of the Division
of
Corporation Finance in our review of your filing or in response to
our comments on your filing.
You may contact Adam Washecka, Staff Accountant, at (202)
551-
3375 or Ivette Leon, Assistant Chief Accountant, at (202) 551-3351
if
you have questions regarding comments on the financial statements
and
related matters. Please contact me at (202) 551-3810 with any
other
questions.
Sincerely,
Larry Spirgel
Assistant Director
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Mr. Naftali Idan
Ceragon Networks Ltd.
July 12, 2005
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