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TMCNet:  Gilat Announces Third Quarter 2012 Results

[November 14, 2012]

Gilat Announces Third Quarter 2012 Results

PETAH TIKVA, Israel, Nov 14, 2012 (GlobeNewswire via COMTEX) -- Gilat Satellite Networks Ltd. (Nasdaq:GILT) (TASE:GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the third quarter ended September 30, 2012.



Revenues for the third quarter of 2012 were $89 million, compared to $83.9 million for the same period in 2011. On a GAAP basis, operating income for the third quarter of 2012 was $3.2 million compared to an operating income of $1.9 million in the third quarter of 2011. Net income for the third quarter of 2012 was $3.3 million, or $0.08 per diluted share compared to net income of $4.3 million, or $0.10 per diluted share in the third quarter of 2011.

On a non-GAAP basis, operating income for the third quarter of 2012 was $5.7 million compared to an operating income of $4.3 million in the third quarter of 2011. On a non-GAAP basis, net income for the period was $5.8 million, or $0.13 per diluted share, compared to net income of $2.3 million, or $0.05 per diluted share, in the comparable period in 2011.

EBITDA for the third quarter of 2012 reached $9.8 million compared with $8.1 million in the comparable period in 2011.

Cash generated from operations was $8.5 million in the quarter.

"The third quarter of 2012 was a strong quarter for Gilat as we saw an increase in revenues and operating income on both a sequential and year-over-year basis," stated Erez Antebi, Chief Executive Officer of Gilat. "We have generated significant cash from operations and continue to invest back into our strategic business segments." "On the business side, we have seen a strong rate of implementation at NBN Co. in Australia and initial orders for our Ka CPE from a large European ISP as part of the SES Broadband Services consumer rollout," Antebi noted. "In our Services division, we have closed new contracts and expanded on existing contracts, while we continue to make progress in our Defense division, even while the macro defense industry remains challenging. We remain focused on our strategic growth segments of Ka and Satellite-on-the-Move, as well as our drive to increase profitability and generate cash." Key Recent Announcements: - Strategic Appointment of Michael Barthlow to Strengthen US Sales Efforts; - Raysat E-7000 Low-Profile Antenna System Taking Center Stage in the Broadcast of Live Video Footage from Emerging World Events as They Happen; - Gilat's Spacenet Equipped its 10,000th Dollar General Store with Advanced SkyEdge VSAT Technology; - First Ka-Band VSAT Order Received from One of Europe's Largest Satellite Broadband ISPs as Part of SES Broadband Services' Consumer Rollout; - Enhancement of SkyEdge VSAT Platform's Disaster Recovery Capabilities with Automated Dual IPSec.

Conference Call and Webcast Details: Gilat management will host a conference call today at 14:30 GMT/ 09:30 EST/ 16:30 IST (Israel Standard Time) to discuss the results. International participants are invited to access the call at (972) 3-918-0609, and US-based participants are invited to access the call by dialing (888) 668-9141. A replay of the conference call will be available beginning at approximately 17:00 GMT/ 12:00 EST/ 19:00 IST today, until 17:00 GMT/ 12:00 EST/ 19:00 IST November 17, 2012. International participants are invited to access the replay at (972) 3-925-5900, and US-based participants are invited to access the replay by dialing (888) 295-2634. A replay of the call may also be accessed as a webcast via Gilat's website at www.gilat.com and will be archived for 30 days.

Notes: (1) The attached summary financial statements were prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The attached summary financial statements are unaudited. To supplement the consolidated financial statements presented in accordance with GAAP, the Company presents Gilat's EBITDA before the impact of non-cash share-based payment charges, depreciation and amortization, other income and other costs related to acquisition transactions. Non-GAAP presentations of net income, EBITDA and earnings per share are provided to enhance the understanding of the Company's historical financial performance and comparability between periods.

(2) Operating income before depreciation, amortization, non-cash stock option expenses as per ASC 718 (formerly SFAS 123(R)) and other costs related to acquisition transactions ('EBITDA') is presented because it is a measure commonly used and is presented solely in order to improve the understanding of the Company's operating results and to provide further perspective on these results. EBITDA, however, should not be considered as an alternative to operating income or net income for the period as an indicator of the operating performance of the Company.

Similarly, EBITDA should not be considered as an alternative to cash flows from operating activities as a measure of liquidity. EBITDA is not a measure of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. EBITDA may not be indicative of the historic operating results of the Company; nor is it meant to be predictive of potential future results. Reconciliation between the Company's Operating income and EBITDA is presented in the attached summary financial statements.

About Gilat Satellite Networks Ltd.

Gilat Satellite Networks Ltd (Nasdaq:GILT) (TASE:GILT) is a leading provider of products and services for satellite-based broadband communications. Gilat develops and markets a wide range of high-performance satellite ground segment equipment and VSATs, with an increasing focus on the consumer and Ka-band market. In addition, Gilat enables mobile SOTM (Satellite-on-the-Move) solutions providing low-profile antennas, next generation solid-state power amplifiers and modems. Gilat also provides managed network and satellite-based services for rural telephony and Internet access via its subsidiaries in the United States, Peru and Colombia.

With over 25 years of experience, and over a million products shipped to more than 85 countries, Gilat has provided enterprises, service providers and operators with efficient and reliable satellite-based connectivity solutions, including cellular backhaul, banking, retail, e-government and rural communication networks. Gilat also enables leading defense, public security and news organizations to implement advanced, on-the-move tactical communications on board their land, air and sea fleets using Gilat's high-performance SOTM solutions. For more information, please visit us at www.gilat.com The Gilat Satellite Networks Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/ pkgid=5848 Certain statements made herein that are not historical are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. The words "estimate", "project", "intend", "expect", "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties. Many factors could cause the actual results, performance or achievements of Gilat to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic and business conditions, inability to maintain market acceptance to Gilat's products, inability to timely develop and introduce new technologies, products and applications, rapid changes in the market for Gilat's products, loss of market share and pressure on prices resulting from competition, introduction of competing products by other companies, inability to manage growth and expansion, loss of key OEM partners, inability to attract and retain qualified personnel, inability to protect the Company's proprietary technology and risks associated with Gilat's international operations and its location in Israel. For additional information regarding these and other risks and uncertainties associated with Gilat's business, reference is made to Gilat's reports filed from time to time with the Securities and Exchange Commission.

GILAT SATELLITE NETWORKS LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS US dollars in thousands September December 30, 31, ---------- ---------- 2012 2011 ---------- ---------- Unaudited ---------- ASSETS CURRENT ASSETS: Cash and cash equivalents 61,026 56,231 Short-term restricted cash 2,453 7,034 Restricted cash held by trustees 7,752 1,549 Trade receivables, net 61,719 51,654 Inventories 27,913 31,933 Other current assets 28,781 25,767 ---------- ---------- Total current assets 189,644 174,168 ---------- ---------- LONG-TERM INVESTMENTS AND RECEIVABLES: Long-term restricted cash 1,152 2,025 Severance pay fund 9,233 9,722 Long-term trade receivables, receivables in respect of capital leases and other receivables 19,367 20,219 ---------- ---------- Total long-term investments and receivables 29,752 31,966 ---------- ---------- PROPERTY AND EQUIPMENT, NET 96,075 100,926 ---------- ---------- INTANGIBLE ASSETS, NET 46,010 49,927 ---------- ---------- GOODWILL 89,691 89,691 ---------- ---------- TOTAL ASSETS 451,172 446,678 ------------------------------ ========== ========== GILAT SATELLITE NETWORKS LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS US dollars in thousands September December 30, 31, ---------- ---------- 2012 2011 ---------- ---------- Unaudited ---------- LIABILITIES AND EQUITY CURRENT LIABILITIES: Short-term bank credit 4,161 2,971 Current maturities of long-term loans and convertible notes 22,299 19,092 Trade payables 26,249 25,477 Accrued expenses 22,988 25,609 Short-term advances from customer, held by trustees 4,487 1,551 Other current liabilities 33,756 36,764 ---------- ---------- Total current liabilities 113,940 111,464 ---------- ---------- LONG-TERM LIABILITIES: Accrued severance pay 9,193 9,445 Long-term loans, net 41,668 40,353 Other long-term liabilities 22,010 25,341 ---------- ---------- Total long-term liabilities 72,871 75,139 ---------- ---------- COMMITMENTS AND CONTINGENCIES EQUITY: Share capital - ordinary shares of NIS 0.2 par value 1,900 1,882 Additional paid in capital 868,928 867,098 Accumulated other comprehensive income 1,869 541 Accumulated deficit (608,336) (609,446) ---------- ---------- Total equity 264,361 260,075 ---------- ---------- TOTAL LIABILITIES AND EQUITY 451,172 446,678 ------------------------------ ========== ========== GILAT SATELLITE NETWORKS LTD.

RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS FOR COMPARATIVE PURPOSES U.S. dollars in thousands (except per share data) Three Three months months ended ended September September 30, 2012 30, 2011 --------- ----------- --------- --------- ----------- --------- Adjustments Adjustments GAAP (1) Non-GAAP GAAP (1) Non-GAAP --------- ----------- --------- --------- ----------- --------- Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited --------- ----------- --------- --------- ----------- --------- Revenues 89,009 -- 89,009 83,862 -- 83,862 Cost of revenues 60,588 (1,661) 58,927 54,376 (1,731) 52,645 --------- ----------- --------- --------- ----------- --------- Gross profit 28,421 1,661 30,082 29,486 1,731 31,217 --------- ----------- --------- --------- ----------- --------- 32% 34% 35% 37% Research and development expenses: Expenses incurred 7,699 (114) 7,585 8,387 (61) 8,326 Less - grants 661 -- 661 1,005 -- 1,005 --------- ----------- --------- --------- ----------- --------- 7,038 (114) 6,924 7,382 (61) 7,321 --------- ----------- --------- --------- ----------- --------- Selling and marketing expenses 9,346 (345) 9,001 11,556 (322) 11,234 General and administrative expenses 8,840 (384) 8,456 8,627 (250) 8,377 --------- ----------- --------- --------- ----------- --------- Operating income 3,197 2,504 5,701 1,921 2,364 4,285 --------- ----------- --------- --------- ----------- --------- Financial expenses, net (412) -- (412) (1,081) -- (1,081) Other income -- -- -- 4,385 (4,385) -- --------- ----------- --------- --------- ----------- --------- Income before taxes on income 2,785 2,504 5,289 5,225 (2,021) 3,204 --------- ----------- --------- --------- ----------- --------- Taxes on income (tax benefit) (536) -- (536) 924 -- 924 --------- ----------- --------- --------- ----------- --------- Net income 3,321 2,504 5,825 4,301 (2,021) 2,280 ========= =========== ========= ========= =========== ========= Basic net earnings per share 0.08 0.14 0.10 0.06 ========= ========= ========= ========= Diluted net earnings per share 0.08 0.13 0.10 0.05 ========= ========= ========= ========= Weighted average number of shares used in computing net earnings per share: Basic 41,462 41,462 40,990 40,990 ========= ========= ========= ========= Diluted 42,302 43,807 41,949 42,832 ========= ========= ========= ========= (1) Adjustments reflect the effect of non-cash stock options expenses as per ASC 718, amortization of intangible assets related to acquisition transactions and other income.

Three Three months months ended ended September September 30, 2012 30, 2011 ----------- ----------- Unaudited Unaudited ----------- ----------- Non-cash stock-based compensation expenses: Cost of Revenues 88 72 Research and development 114 61 Selling and marketing 116 95 General and administrative 384 250 ----------- ----------- 702 478 =========== =========== Amortization of intangible assets related to acquisition transactions: Cost of Revenues 1,573 1,659 Selling and marketing 229 227 ----------- ----------- 1,802 1,886 =========== =========== GILAT SATELLITE NETWORKS LTD.

RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS FOR COMPARATIVE PURPOSES U.S. dollars in thousands (except per share data) Nine months Nine months ended ended September September 30, 2012 30, 2011 --------- ----------- --------- --------- ----------- --------- Adjustments Adjustments GAAP (1) Non-GAAP GAAP (1) Non-GAAP --------- ----------- --------- --------- ----------- --------- Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited --------- ----------- --------- --------- ----------- --------- Revenues 250,935 -- 250,935 245,597 -- 245,597 Cost of revenues 170,796 (4,948) 165,848 157,631 (5,717) 151,914 --------- ----------- --------- --------- ----------- --------- Gross profit 80,139 4,948 85,087 87,966 5,717 93,683 --------- ----------- --------- --------- ----------- --------- 32% 34% 36% 38% Research and development expenses: Expenses incurred 24,274 (243) 24,031 26,113 (174) 25,939 Less - grants 2,345 -- 2,345 2,740 -- 2,740 --------- ----------- --------- --------- ----------- --------- 21,929 (243) 21,686 23,373 (174) 23,199 --------- ----------- --------- --------- ----------- --------- Selling and marketing expenses 30,097 (973) 29,124 34,748 (1,054) 33,694 General and administrative expenses 25,114 (1,020) 24,094 26,734 (795) 25,939 Costs related to acquisition transactions -- -- -- 256 (256) -- --------- ----------- --------- --------- ----------- --------- Operating income 2,999 7,184 10,183 2,855 7,996 10,851 --------- ----------- --------- --------- ----------- --------- Financial expenses, net (2,427) -- (2,427) (1,818) -- (1,818) Other income -- -- -- 6,211 (6,211) -- --------- ----------- --------- --------- ----------- --------- Income before taxes on income 572 7,184 7,756 7,248 1,785 9,033 --------- ----------- --------- --------- ----------- --------- Taxes on income (tax benefit) (538) -- (538) 1,568 -- 1,568 --------- ----------- --------- --------- ----------- --------- Net income 1,110 7,184 8,294 5,680 1,785 7,465 ========= =========== ========= ========= =========== ========= Basic net earnings per share 0.03 0.20 0.14 0.18 ========= ========= ========= ========= Diluted net earnings per share 0.03 0.19 0.14 0.17 ========= ========= ========= ========= Weighted average number of shares used in computing net earnings per share Basic 41,346 41,346 40,868 40,868 ========= ========= ========= ========= Diluted 42,224 43,355 42,059 42,925 ========= ========= ========= ========= (1) Adjustments reflect the effect of non-cash stock options expenses as per ASC 718, costs related to acquisition transactions, amortization of intangible assets related to acquisition transactions and other income.

Nine months Nine months ended ended September September 30, 2012 30, 2011 ----------- ----------- Unaudited Unaudited ----------- ----------- Non-cash stock-based compensation expenses: Cost of Revenues 230 226 Research and development 243 174 Selling and marketing 285 339 General and administrative 1,020 795 ----------- ----------- 1,778 1,534 =========== =========== Amortization of intangible assets related to acquisition transactions: Cost of Revenues 4,718 5,491 Selling and marketing 688 715 ----------- ----------- 5,406 6,206 =========== =========== GILAT SATELLITE NETWORKS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands (except per share data) Nine months ended Three months ended September 30, September 30, -------------------- -------------------- 2012 2011 2012 2011 --------- --------- --------- --------- Unaudited Unaudited Unaudited Unaudited --------- --------- --------- --------- Revenues 250,935 245,597 89,009 83,862 Cost of revenues 170,796 157,631 60,588 54,376 --------- --------- --------- --------- Gross profit 80,139 87,966 28,421 29,486 --------- --------- --------- --------- Research and development expenses: Expenses incurred 24,274 26,113 7,699 8,387 Less - grants 2,345 2,740 661 1,005 --------- --------- --------- --------- 21,929 23,373 7,038 7,382 --------- --------- --------- --------- Selling and marketing expenses 30,097 34,748 9,346 11,556 General and administrative expenses 25,114 26,734 8,840 8,627 Costs related to acquisition transactions -- 256 -- -- --------- --------- --------- --------- Operating income 2,999 2,855 3,197 1,921 --------- --------- --------- --------- Financial expenses, net (2,427) (1,818) (412) (1,081) Other income -- 6,211 -- 4,385 --------- --------- --------- --------- Income before taxes on income 572 7,248 2,785 5,225 --------- --------- --------- --------- Taxes on income (tax benefit) (538) 1,568 (536) 924 --------- --------- --------- --------- Net income 1,110 5,680 3,321 4,301 ========= ========= ========= ========= Basic net earnings per share 0.03 0.14 0.08 0.10 ========= ========= ========= ========= Diluted net earnings per share 0.03 0.14 0.08 0.10 ========= ========= ========= ========= Weighted average number of shares used in computing net earnings per share Basic 41,346 40,868 41,462 40,990 ========= ========= ========= ========= Diluted 42,224 42,059 42,302 41,949 ========= ========= ========= ========= GILAT SATELLITE NETWORKS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS US dollars in thousands Nine months ended Three months ended September 30, September 30, -------------------- -------------------- 2012 2011 2012 2011 --------- --------- --------- --------- Unaudited Unaudited Unaudited Unaudited --------- --------- --------- --------- Cash flows from operating activities: --------------------------------------------------- Net income 1,110 5,680 3,321 4,301 Adjustments required to reconcile net income to net cash provided by operating activities: Depreciation and amortization 16,591 18,051 5,893 5,682 Gain from the sale of an investment accounted for at cost -- (3,034) -- (3,034) Stock-based compensation related to employees 1,778 1,534 702 478 Accrued severance pay, net 238 (264) (73) (71) Accrued interest and exchange rate differences on short and long-term restricted cash, net (95) 231 (26) 259 Exchange rate differences on long-term loans 9 150 133 (372) Capital loss from disposal of property and equipment 47 118 50 49 Deferred income taxes (1,079) 1,161 (749) 791 Increase in trade receivables, net (10,624) (2,907) (3,510) (2,926) Decrease (increase) in other assets (including short-term, long-term and deferred charges) (2,326) (19,237) 3,102 (303) Decrease (increase) in inventories 2,447 (3,695) 2,842 (2,709) Increase (decrease) in trade payables 833 3,154 (4,576) 3,578 Increase (decrease) in accrued expenses (2,631) (564) 3,516 458 Increase (decrease) in advances from customer, held by trustees, net 2,936 1,609 (2,066) 2,613 Decrease in other accounts payable and other long term liabilities (5,744) (10,379) (25) (8,817) --------- --------- --------- --------- Net cash generated from (used in) operating activities 3,490 (8,392) 8,534 (23) --------- --------- --------- --------- GILAT SATELLITE NETWORKS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS US dollars in thousands Nine months ended Three months ended September 30, September 30, -------------------- -------------------- 2012 2011 2012 2011 --------- --------- --------- --------- Unaudited Unaudited Unaudited Unaudited --------- --------- --------- --------- Cash flows from investing activities: --------------------------------------------------- Purchase of property and equipment (3,428) (6,104) (1,262) (2,212) Proceeds from sale of an investment accounted for at cost -- 3,034 -- 3,034 Investment in restricted cash held by trustees (28,701) (6,320) (11,081) (6,320) Proceeds from restricted cash held by trustees 22,516 4,447 13,441 3,431 Investment in restricted cash (including long-term) (15,417) (14,731) (6,303) (2,589) Proceeds from restricted cash (including long-term) 20,877 16,969 6,253 2,878 Proceeds from working capital adjustment to subsidiary purchase price -- 1,465 -- -- Acquisitions of subsidiaries, net of cash acquired -- (1,867) -- -- Purchase of intangible asset (82) (26) (10) (5) --------- --------- --------- --------- Net cash generated from (used in) investing activities (4,235) (3,133) 1,038 (1,783) --------- --------- --------- --------- Cash flows from financing activities: --------------------------------------------------- Repayment of convertible notes -- (394) -- -- Issuance of restricted stock units and exercise of stock options 18 20 6 6 Short-term bank credit, net 1,190 642 (11) 917 Proceeds from long-term loans 10,000 -- -- -- Repayment of long-term loans (5,435) (1,047) (1,012) (195) --------- --------- --------- --------- Net cash generated from (used in) financing activities 5,773 (779) (1,017) 728 --------- --------- --------- --------- Effect of exchange rate changes on cash and cash equivalents (233) (439) (69) (541) --------- --------- --------- --------- Increase (decrease) in cash and cash equivalents 4,795 (12,743) 8,486 (1,619) Cash and cash equivalents at the beginning of the period 56,231 57,238 52,540 46,114 --------- --------- --------- --------- Cash and cash equivalents at the end of the period 61,026 44,495 61,026 44,495 ========= ========= ========= ========= GILAT SATELLITE NETWORKS LTD.

CONDENSED EBITDA US dollars in thousands Nine months ended Three months ended September 30, September 30, -------------------- -------------------- 2012 2011 2012 2011 --------- --------- --------- --------- Unaudited Unaudited Unaudited Unaudited --------- --------- --------- --------- Operating income 2,999 2,855 3,197 1,921 Add: Non-cash stock-based compensation expenses 1,778 1,534 702 478 Costs related to acquisition transactions -- 256 -- -- Depreciation and amortization 16,591 18,051 5,893 5,682 --------- --------- --------- --------- EBITDA 21,368 22,696 9,792 8,081 ========= ========= ========= ========= This news release was distributed by GlobeNewswire, www.globenewswire.com SOURCE: Gilat Satellite Networks Ltd.

(Logo: http://media.primezone.com/cache/11105/int/6522.jpg) CONTACT: Phil Carlson / Josh Dver, KCSA pcarlson@kcsa.com / jdver@kcsa.com 1 (212) 896 1233 / 1239 David Leichner, Gilat Satellite Networks Ltd.

davidle@gilat.com (972) 3 925 2321

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