CORRECTING and REPLACING -- Gilat Announces Second Quarter 2014 Results

Profitability and Revenue Improve Compared to First Quarter 2014

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| Source: Gilat Satellite Networks Ltd.

In a release issued under the same headline earlier today by Gilat Satellite Networks Ltd. (Nasdaq:GILT) (TASE:GILT), certain figures have been updated, specifically in the "RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS (Six months ended)" table. The corrected release follows:

PETAH TIKVA, Israel, Aug. 13, 2014 (GLOBE NEWSWIRE) -- Gilat Satellite Networks Ltd. (Nasdaq:GILT) (TASE:GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the second quarter ended June 30, 2014.

Key Financial Highlights:

  • Revenues for the second quarter increased to $54.1 million compared to $50.9 million in the first quarter of 2014.
  • Non-GAAP operating income was $1.5 million, compared to operating income of $0.5 million in the first quarter of 2014. GAAP operating loss was $0.5 million compared to a loss of $1.5 million in the first quarter of 2014
  • Management reaffirms 2014 objectives for annual revenues of $240-$245 million and EBITDA margin levels of approximately 9%

Revenues for the second quarter were $54.1 million, compared to $50.9 million in the first quarter of 2014 and to $61.9 million for the comparable period in 2013. The difference between the second quarter of 2014 and the comparable quarter in 2013 is mostly attributed to the decrease in revenues in our Services Division.

On a non-GAAP basis, operating income was $1.5 million in the second quarter as compared to operating income of $0.5 million in the first quarter of 2014 and of $1.9 million in the comparable quarter of 2013. On a non-GAAP basis, net income for the quarter was $0.6 million or an income of $0.01 per diluted share compared to a net loss of $0.6 million or a loss of $0.01 per diluted share in the first quarter of 2014 and to a net loss of $0.9 million or $0.02 per diluted share in the comparable period in 2013.

GAAP operating loss for the second quarter was $0.5 million as compared to an operating loss of $1.5 million in the first quarter of 2014 and of $0.1 million in the comparable period in 2013. GAAP net loss from continuing operations for the quarter was $1.4 million, or a loss of $0.03 per diluted share, compared to a net loss from continuing operations of $2.6 million, or a loss of $0.06 per diluted share for the first quarter of 2014 and compared to a net loss from continuing operations of $2.9 million, or a loss of $0.07 per diluted share in the comparable period in 2013.

EBITDA for the second quarter was $3.9 million compared to $2.8 million in the first quarter of 2014 and to $5.3 million in the comparable period in 2013.

Erez Antebi, Chief Executive Officer of Gilat stated, "Our improved results in the second quarter come from both of our Commercial and Defense Divisions, as well as from the cost-reduction measures we took last year. Our Defense business continued to grow, with increase in demand for both On-The-Pause as well as On-The-Move solutions."

Antebi concluded, "We anticipate the second half of 2014 to be stronger than the first half thanks to significant revenues to be generated by projects in Peru and Colombia as well as growth in the commercial and defense activities. We are confident that we are on track to meet our previously stated 2014 management objectives."

Key Recent Announcements:

  • Gilat Announces a Breakthrough in LTE Backhauling using its Capricorn TDMA VSAT
  • Gilat Upgrades Wireless Nation's Broadband Services for Consumers and Businesses
  • Gilat's Low-profile Maritime Terminals Deployed

The GAAP financial results include the effect of non-cash stock options expenses, amortization of intangible assets resulting from the purchase price allocation, restructuring costs and net income (loss) from discontinued operations.

Conference Call and Webcast Details:

Gilat management will host a conference call today at 13:30 GMT/ 09:30 EDT/ 16:30 IDT (Israel Daylight Time) to discuss the results. International participants are invited to access the call at (972) 3-918-0644, and US-based participants are invited to access the call by dialing (888) 407-2553. A replay of the conference call will be available beginning at approximately 16:00 GMT/ 12:00 EDT/ 19:00 IDT today, until 16:00 GMT/ 12:00 EDT/ 19:00 IDT August 15, 2014. 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) 326-9310. 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 information and statements presented in accordance with GAAP, the Company presents its EBITDA before the impact of non-cash stock based compensation, 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.

We regularly use supplemental non-GAAP financial measures internally to understand manage and evaluate our business and make operating decisions. We believe these non-GAAP financial measures provide consistent and comparable measures to help investors understand our current and future operating cash flow performance. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies.

(2) Operating income before depreciation, amortization, non-cash stock based compensation as per ASC 718 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. . A reconciliation of specific adjustments to GAAP results is provided in the tables below.

About Gilat

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 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

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 SHEET    
US dollars in thousands    
     
  June 30, December 31,
  2014 2013
  Unaudited  
     
ASSETS    
     
CURRENT ASSETS:    
Cash and cash equivalents  33,400  58,424
Restricted cash  32,197  18,891
Restricted cash held by trustees  877  3,221
Trade receivables, net  64,828  56,466
Inventories  24,700  27,141
Other current assets  17,759  10,143
Total current assets  173,761  174,286
     
LONG-TERM INVESTMENTS AND RECEIVABLES:    
Long-term restricted cash  304  6,279
Severance pay funds  9,454  9,856
Other long term receivables and deferred charges  5,267  278
Total long-term investments and receivables  15,025  16,413
     
PROPERTY AND EQUIPMENT, NET  93,311  85,369
     
INTANGIBLE ASSETS, NET  25,900  28,830
     
GOODWILL  63,870  63,870
     
TOTAL ASSETS  371,867  368,768
     
     
GILAT SATELLITE NETWORKS LTD.    
CONDENSED CONSOLIDATED BALANCE SHEET    
US dollars in thousands    
  June 30, December 31,
  2014 2013
  Unaudited  
     
LIABILITIES AND EQUITY    
     
CURRENT LIABILITIES:    
Short-term bank credit  7,518  -- 
Current maturities of long-term loans  4,664  4,665
Trade payables  20,991  20,900
Accrued expenses  21,037  16,748
Short-term advances from customers, held by trustees  3,596  -- 
Other current liabilities  45,146  54,666
     
Total current liabilities  102,952  96,979
     
LONG-TERM LIABILITIES:    
Accrued severance pay  9,123  9,628
Long-term loans, net of current maturities  26,888  31,251
Other long-term liabilities  8,936  4,877
     
Total long-term liabilities  44,947  45,756
     
COMMITMENTS AND CONTINGENCIES    
     
EQUITY:    
Share capital - ordinary shares of NIS 0.2 par value  1,957  1,932
Additional paid-in capital  874,986  873,045
Accumulated other comprehensive income  1,670  1,591
Accumulated deficit  (654,645)  (650,535)
     
Total equity  223,968  226,033
     
TOTAL LIABILITIES AND EQUITY  371,867  368,768
     
             
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 months ended       Three months ended   
    30 June 2014     30 June 2013  
  GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
  Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
             
Revenues  54,050  --   54,050  61,916  --   61,916
Cost of revenues  34,730  (1,248)  33,482  41,930  (1,244)  40,686
Gross profit  19,320  1,248  20,568  19,986  1,244  21,230
  36%   38% 32%   34%
Research and development expenses:            
Expenses incurred  6,878  (119)  6,759  7,145  (112)  7,033
Less - grants  594  --   594  532  --   532
   6,284  (119)  6,165  6,613  (112)  6,501
Selling and marketing expenses  8,677  (350)  8,327  7,774  (313)  7,461
General and administrative expenses  4,841  (290)  4,551  5,672  (273)  5,399
Operating income (loss)  (482)  2,007  1,525  (73)  1,942  1,869
Financial expenses, net  (515)  --   (515)  (2,396)  --   (2,396)
Income (loss) before taxes on income  (997)  2,007  1,010  (2,469)  1,942  (527)
Taxes on income  434  --   434  381  --   381
Net income (loss) from continuing operations  (1,431)  2,007  576  (2,850)  1,942  (908)
Net income (loss) from discontinued operations  8  (8)  --   (1,126)  1,126  -- 
Net income (loss)  (1,423)  1,999  576  (3,976)  3,068  (908)
             
Basic net earnings (loss) per share from continuing operations  (0.03)      (0.07)    
Basic net earnings (loss) per share from discontinued operations  0.00      (0.03)    
Basic net earnings (loss) per share  (0.03)    0.01  (0.10)    (0.02)
             
Diluted net earnings (loss) per share from continuing operations  (0.03)      (0.07)    
Diluted net earnings (loss) per share from discontinued operations  0.00      (0.03)    
Diluted net earnings (loss) per share  (0.03)    0.01  (0.10)    (0.02)
             
Weighted average number of shares used in            
computing net earnings (loss) per share            
Basic 42,358   42,358 41,932   41,932
Diluted 42,358   43,579 41,932   41,932
             
             
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related to acquisition transactions, and net income (loss) from discontinued operations.
             
     Three months ended       Three months ended   
    30 June 2014     30 June 2013  
    Unaudited     Unaudited  
Non-cash stock-based compensation expenses:            
Cost of revenues    60      46  
Research and development    119      112  
Selling and marketing    138      102  
General and administrative    290      273  
     607      533  
             
Amortization of intangible assets related to acquisition transactions:            
Cost of revenues    1,188      1,198  
Selling and marketing    212      211  
     1,400      1,409  
             
             
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)
     Six months ended       Six months ended   
    30 June 2014     30 June 2013  
  GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
  Unaudited Unaudited Unaudited   Unaudited Unaudited
             
Revenues  104,901  --   104,901  127,336  --   127,336
Cost of revenues  65,606  (2,515)  63,091  84,569  (2,482)  82,087
Gross profit  39,295  2,515  41,810  42,767  2,482  45,249
  37%   40% 34%   36%
Research and development expenses:            
Expenses incurred  14,117  (241)  13,876  14,776  (211)  14,565
Less - grants  948  --   948  864  --   864
   13,169  (241)  12,928  13,912  (211)  13,701
Selling and marketing expenses  18,367  (692)  17,675  16,760  (614)  16,146
General and administrative expenses  9,753  (593)  9,160  11,117  (535)  10,582
Operating income (loss)  (1,994)  4,041  2,047  978  3,842  4,820
Financial expenses, net  (1,549)  --   (1,549)  (3,147)  --   (3,147)
Income (loss) before taxes on income  (3,543)  4,041  498  (2,169)  3,842  1,673
Taxes on income  524  --   524  757  --   757
Net income (loss) from continuing operations  (4,067)  4,041  (26)  (2,926)  3,842  916
Net income (loss) from discontinued operations  (43)  43  --   (3,406)  3,406  -- 
Net income (loss)  (4,110)  4,084  (26)  (6,332)  7,248  916
             
Basic net earnings (loss) per share from continuing operations  (0.10)      (0.07)    
Basic net loss per share from discontinued operations  (0.00)      (0.08)    
Basic net earnings (loss) per share  (0.10)    (0.00)  (0.15)    0.02
             
Diluted net earnings (loss) per share from continuing operations  (0.10)      (0.07)    
Diluted net loss per share from discontinued operations  (0.00)      (0.08)    
Diluted net earnings (loss) per share  (0.10)    (0.00)  (0.15)    0.02
             
Weighted average number of shares used in            
computing net earnings (loss) per share            
Basic 42,267   42,267 41,849   41,849
Diluted 42,267   42,267 41,849   43,906
             
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related to acquisition transactions, and net income (loss) from discontinued operations.
             
     Six months ended       Six months ended   
    30 June 2014     30 June 2013  
     Unaudited       Unaudited   
Non-cash stock-based compensation expenses:            
Cost of revenues    118      86  
Research and development    241      211  
Selling and marketing    268      191  
General and administrative    593      535  
     1,220      1,023  
             
Amortization of intangible assets related to acquisition transactions:            
Cost of revenues    2,397      2,396  
Selling and marketing    424      423  
     2,821      2,819  
 
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except per share data)
  Six months ended Three months ended
  June 30, June 30,
  2014 2013 2014 2013
  Unaudited Unaudited Unaudited Unaudited
         
Revenues  104,901  127,336  54,050  61,916
Cost of revenues  65,606  84,569  34,730  41,930
Gross profit  39,295  42,767  19,320  19,986
Research and development expenses:        
Expenses incurred  14,117  14,776  6,878  7,145
Less - grants  948  864  594  532
   13,169  13,912  6,284  6,613
Selling and marketing expenses  18,367  16,760  8,677  7,774
General and administrative expenses  9,753  11,117  4,841  5,672
Operating income (loss)  (1,994)  978  (482)  (73)
Financial expenses, net  (1,549)  (3,147)  (515)  (2,396)
Income (loss) before taxes on income  (3,543)  (2,169)  (997)  (2,469)
Taxes on income  524  757  434  381
Net loss from continuing operations  (4,067)  (2,926)  (1,431)  (2,850)
Net loss from discontinued operations  (43)  (3,406)  8  (1,126)
Net loss  (4,110)  (6,332)  (1,423)  (3,976)
         
Net loss per share from continuing operations (basic and diluted)  (0.10)  (0.07)  (0.03)  (0.07)
Net loss per share from discontinued operations (basic and diluted)  (0.00)  (0.08)  0.00  (0.03)
Net loss per share (basic and diluted)  (0.10)  (0.15)  (0.03)  (0.10)
         
Weighted average number of shares used in computing net loss per share        
Basic and diluted 42,267 41,849 42,358 41,932
         
         
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
         
  Six months ended Three months ended
  June 30, June 30,
  2014 2013 2014 2013
  Unaudited Unaudited Unaudited Unaudited
Cash flows from continuing operations        
Cash flows from operating activities:        
Net loss from continuing operations  (4,067)  (2,926)  (1,431)  (2,850)
Adjustments required to reconcile net loss        
to net cash generated provided by (used in) operating activities:        
Depreciation and amortization  7,428  9,512  3,744  4,815
Stock-based compensation  1,220  1,023  607  533
Accrued severance pay, net  (103)  64  19  50
Accrued interest and exchange rate differences on short and long-term restricted cash, net  (32)  392  (118)  353
Exchange rate differences on long-term loans  (34)  (46)  (40)  86
Capital loss from disposal of property and equipment  60  12  43  -- 
Deferred income taxes  (47)  1,117  (11)  1,133
Increase in trade receivables, net  (8,034)  (2,205)  (5,994)  (6,385)
Decrease (increase) in other assets (including short-term, long-term and deferred charges)  (12,535)  3,802  (4,752)  4,422
Decrease (increase) in inventories  699  (4,450)  29  (538)
Increase (decrease) in trade payables  (52)  3,026  1,998  2,769
Increase (decrease) in accrued expenses  4,176  (3,443)  2,501  (2,611)
Increase (decrease) in advances from customers, held by trustees  3,451  (3,923)  (777)  306
Increase (decrease) in other current liabilities and other long term liabilities  (5,842)  (4,491)  (3,599)  644
Net cash provided by (used in) operating activities  (13,712)  (2,536)  (7,781)  2,727
         
         
GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
         
  Six months ended Three months ended
  June 30, June 30,
  2014 2013 2014 2013
  Unaudited Unaudited Unaudited Unaudited
Cash flows from investing activities:        
Purchase of property and equipment  (10,319)  (1,820)  (9,794)  (887)
Investment in restricted cash held by trustees  (4,228)  (11,236)  --   (9,454)
Proceeds from restricted cash held by trustees  6,588  9,771  3,638  6,364
Investment in restricted cash (including long-term)  (7,516)  (2,365)  (7,516)  (202)
Proceeds from restricted cash (including long-term)  176  2,021  100  1,956
Purchase of intangible assets  --   (16)  --   -- 
         
Net cash used in investing activities  (15,299)  (3,645)  (13,572)  (2,223)
         
         
Cash flows from financing activities:        
Issuance of restricted stock units and exercise of stock options  746  562  453  9
Payment of obligation related to the purchase of intangible assets  --   (500)  --   (500)
Short-term bank credit, net  7,216  (458)  5,564  (975)
Repayment of long-term loans  (4,330)  (5,975)  (165)  (988)
         
Net cash provided by (used in) financing activities  3,632  (6,371)  5,852  (2,454)
         
Cash flows from discontinued operations        
Net cash used in operating activities  --   (3,336)  --   (3,254)
Net cash provided by investing activities  --   1,170  --   160
Net cash provided by (used in) financing activities  --   13,818  --   (442)
   --   11,652  --   (3,536)
         
Effect of exchange rate changes on cash and cash equivalents  355  (227)  322  (190)
         
Decrease in cash and cash equivalents  (25,024)  (1,127)  (15,179)  (5,676)
         
Cash and cash equivalents at the beginning of the period  58,424  66,968  48,579  71,517
         
Cash and cash equivalents at the end of the period  33,400  65,841  33,400  65,841
         
         
GILAT SATELLITE NETWORKS LTD.        
CONDENSED EBITDA        
US dollars in thousands        
  Six months ended Three months ended
  June 30, June 30,
  2014 2013 2014 2013
  Unaudited Unaudited Unaudited Unaudited
         
Operating income (loss)  (1,994)  978  (482)  (73)
Add:        
Non-cash stock-based compensation expenses  1,220  1,023  607  533
Depreciation and amortization  7,428  9,512  3,744  4,815
EBITDA  6,654  11,513  3,869  5,275
         
KCSA Strategic Communications
Phil Carlson - Vice President
(212) 896-1233


Vincent G. Piazza - Account Executive
(212) 896-1289


Gilat Satellite Networks
Joelle Inowlocki