Gilat Announces Second Quarter 2011 Results


PETAH TIKVA, Israel, Aug. 10, 2011 (GLOBE NEWSWIRE) -- Gilat Satellite Networks Ltd. (Nasdaq:GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the quarter ending June 30, 2011.

Revenues for the second quarter of 2011 were $81.7 million, compared to $51.8 million in the second quarter of 2010, up 58%. Operating income for the second quarter of 2011 was $0.2 million compared to an operating loss of $1.4 million in the second quarter of 2010. Net income for the second quarter of 2011 was $0.9 million, or $0.02 per diluted share, compared to a net loss of $1.3 million, or a net loss of $0.03 per diluted share, in the comparable period in 2010.

On a Non-GAAP basis, operating income for the period was $2.7 million compared to an operating loss of $1.0 million in the second quarter of 2010. Non-GAAP net income for the period was $2.6 million or $0.06 per diluted share, compared to a net loss of $0.9 million or a net loss of $0.02 per diluted share in the comparable period in 2010.

Gross margins for the second quarter of 2011 were 36% compared to 33% in the comparable period in 2010, and EBITDA for the second quarter reached $6.6 million compared with $2.2 million in the second quarter last year.

Revenues for the six month period ended June 30, 2011 were $161.7 million compared to $108.9 million in the comparable period of 2010. Net income for the six month period in 2011 was $1.4 million, or $0.03 per diluted share, compared to a net loss of $0.7 million, or $0.02 per diluted share, in the same period of 2010.

"Gilat ended the second quarter with strong earnings growth and improvement in all financial indicators compared to the second quarter of last year," said Amiram Levinberg, Gilat's Chief Executive Officer and Chairman of the Board. "The quarter was highlighted by several key customer wins, notably our partnership with Optus for the Australian NBN Interim Satellite solution utilizing multi-spot beam capacity, and more recently, our strategic win for SES Ka-band consumer network. Both awards represent an important vote of confidence in Gilat and open the door to future opportunities in one of the industry's largest growth engines."

The company also announced today that it has been selected to deliver an on-the-move satellite communications (SOTM) solution as part of a security initiative aimed at combating internal and border threats. As part of the initiative, valued at over $10 million, Raysat Antenna Systems will provide equipment and services, including over 100 StealthRay Satellite-on-the-Move (SOTM) antennas.

Resources: Second Quarter 2011 Financial Statements

Recent Announcements:

  • August 2011 - Gilat announced that it has signed an agreement for the delivery of network equipment and Ka-band end-user terminals for SES satellite-based Internet service ASTRA2Connect. The use of Gilat's Ka-band platform will allow SES to deliver significantly faster Internet and VoIP services to customers. Currently serving over 80,000 ASTRA2Connect end-users, SES operates the largest satellite-based broadband network in Europe today. The project, including deals with SES and nominees, can reach a value of up to $70 million over the next five years. Read
     
  • July 2011 - Gilat was selected by Russian Yakutia Ministry of Finance to provide a full turnkey SkyEdge II broadband satellite network to serve new Ministry of Finance locations across Sakha (Yakutia) Republic, one of Russia's largest Federal Districts. Gilat will implement the turn-key SkyEdge II network in cooperation with GBU "CIBP", the local operator and service provider of the Yakutia Ministry of Finance. Read
     
  • July 2011 - Gilat announced that it has been selected by Synterra, Russia's national communications carrier, to provide satellite communications equipment for the extension of a broadband network throughout Siberia and the Russian Far East. The network is set to support the operator's USO goals in the region, providing residents of remote communities with essential connectivity to broadband internet and telephony services. Read
     
  • June 2011 - Gilat announced that it has been selected by Spanish satellite operator HISPASAT, to provide a new broadband satellite IP network based on Gilat's advanced SkyEdge II System. The network will enable the deployment of a broadband program as mandated by the Spanish government, and is planned to provide thousands of consumers across Spain with broadband Internet services. Read
     
  • June 2011 - Gilat announced that it has been selected by one of Russia's largest telecom operators to expand network reach of data and telephony services in one of the nation's largest remote regions. The network includes Gilat's NetEdge gateway solution which makes it possible to connect remote telephone exchange trunks within the region in a single hop. Read
     
  • May 2011 - Gilat announced that it has been selected by Optus to provide a SkyEdge II VSAT network, installation, operation and maintenance for the Australian Government's National Broadband Network Company's (NBN Co) Interim Satellite Service. The contract represents a potential value of $120 million over a five year period. Read
     
  • April 2011 - The Company's subsidiary Spacenet announced that it has acquired CICAT Networks, a US-based provider of broadband network solutions. The acquisition will allow Spacenet to increase its addressable market and offer an expanded range of Managed Network Services to customers. Read
     
  • April 2011 - Gilat announced that it has been selected by Telecom Namibia to provide a SkyEdge II network to serve hundreds of locations throughout Namibia. The new, IP oriented and higher capacity network will replace legacy equipment and enable the connection of new sites to broadband services. Read Trade Release

Conference Call and Webcast Details:

Gilat management will host a conference call today at 13:30 GMT / 9:30 EDT / 16:30 Israel Local Time to discuss the results. International participants are invited to access the call at (972) 3-918-0610, and US-based participants are invited to access the call by dialing (888) 407-2553.

The results presentation may be accessed prior to the conference call via Webcast through the Company's website at www.gilat.com.

A replay of the conference call will be available beginning at approximately 16:00 GMT/12:00 EDT today, until 16:00 GMT/12:00 EDT August 12, 2011. International participants are invited to access the replay at (972) 3-925-5901, 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 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 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 EBIDTA is presented in the attached summary financial statements.

About Gilat Satellite Networks Ltd.:

Gilat is a leading provider of products and professional services for satellite-based broadband communication networks worldwide. Gilat was founded in 1987 and has shipped over 750,000 VSATs (Very Small Aperture Terminals) to more than 85 countries across six continents. Gilat's headquarters are located in Petah Tikva, Israel, and the Company has 22 sales and service offices worldwide. Gilat develops and markets an expansive range of broadband satellite solutions including high-performance VSATs under the SkyEdgeTM and SkyEdge II brands, low-profile antennas for communications-on-the-move, under the RaySat Antenna Systems and the StealthRayTM brands, and next generation solid-state power amplifiers for mission-critical defense and broadcast satellite communications systems under the Wavestream brand. Gilat's wholly-owned subsidiary, Spacenet Inc., is a leading provider of managed services in North America to the business and government segments. Visit Gilat 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 SHEET    
US dollars in thousands    
     
  June 30, December 31,
  2011 2010
  Unaudited  
     
ASSETS    
     
CURRENT ASSETS:    
Cash and cash equivalents  46,114  57,238
Short-term restricted cash  4,489  3,839
Restricted cash held by trustees  --   1,004
Trade receivables, net  53,086  51,994
Inventories  29,679  29,612
Other current assets  27,475  22,973
Total current assets  160,843  166,660
     
LONG-TERM INVESTMENTS AND RECEIVABLES:    
Long-term restricted cash  2,110  4,583
Severance pay fund  10,960  10,572
Long-term trade receivables, receivables in respect of capital leases and other receivables  19,030  6,538
Total long-term investments and receivables  32,100  21,693
     
PROPERTY AND EQUIPMENT, NET  100,973  103,490
     
INTANGIBLE ASSETS AND DEFERRED CHARGES, NET  54,143  57,453
     
GOODWILL  107,536  106,082
     
TOTAL ASSETS  455,595  455,378
     
     
GILAT SATELLITE NETWORKS LTD.    
CONDENSED CONSOLIDATED BALANCE SHEET    
US dollars in thousands    
  June 30, December 31,
  2011 2010
  Unaudited  
     
LIABILITIES AND EQUITY    
     
CURRENT LIABILITIES:    
Short-term bank credit  1,854  2,129
Current maturities of long-term loans and convertible notes  5,456  2,186
Trade payables   18,082  18,267
Accrued expenses   24,289  24,591
Short-term advances from customer, held by trustees  --   1,004
Other current liabilities  40,119  39,675
     
Total current liabilities  89,800  87,852
     
LONG-TERM LIABILITIES:    
Accrued severance pay  10,774  10,579
Long-term loans, net   41,204  45,202
Accrued interest related to restructured debt  288  575
Convertible subordinated notes  14,374  14,379
Other long-term liabilities  32,737  32,678
     
Total long-term liabilities  99,377  103,413
     
COMMITMENTS AND CONTINGENCIES    
     
EQUITY:    
Share capital - ordinary shares of NIS 0.2 par value   1,869  1,855
Additional paid in capital  866,145  865,080
Accumulated other comprehensive income  621  774
Accumulated deficit  (602,217)  (603,596)
     
Total equity  266,418  264,113
     
TOTAL LIABILITIES AND EQUITY  455,595  455,378
             
             
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 2011     30 June 2010  
  GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
  Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
             
Revenues  81,708  --   81,708  51,791  --   51,791
Cost of revenues  52,288  (1,726)  50,562  34,938  (67)  34,871
Gross profit  29,420  1,726  31,146  16,853  67  16,920
  36%   38% 33%   33%
Research and development expenses:            
Expenses incurred  8,859  (58)  8,801  4,749  (43)  4,706
Less - grants  1,264  --   1,264  1,270  --   1,270
   7,595  (58)  7,537  3,479  (43)  3,436
Selling, marketing, general and administrative expenses  21,570  (667)  20,903  14,783  (292)  14,491
Costs related to acquisition transactions   100  (100)  --   --   --   -- 
Operating income (loss)  155  2,551  2,706  (1,409)  402  (1,007)
Financial expenses, net   (61)  --   (61)  (59)  --   (59)
Other income   877  (877)  --   --   --   -- 
Income (loss) before taxes on income  971  1,674  2,645  (1,468)  402  (1,066)
Taxes on income (tax benefit)  32  --   32  (135)  --   (135)
Net income (loss)  939  1,674  2,613  (1,333)  402  (931)
             
Basic net earnings (loss) per share  0.02    0.06  (0.03)    (0.02)
Diluted net earnings (loss) per share  0.02    0.06  (0.03)    (0.02)
             
Weighted average number of shares used in             
computing net earnings (loss) per share             
Basic  40,869    40,869  40,403    40,403
Diluted  42,091    42,931  40,403    40,403
             
(1) Adjustments reflect the effect of non-cash stock options expenses as per SFAS123R, costs related to       
 acquisition transactions, amortization of intangible assets related to acquisition transactions and other income.      
             
    Three months ended      Three months ended   
    30 June 2011     30 June 2010  
Non-cash stock-based compensation expenses:            
Cost of Revenues    74      67  
Research and development    58      43  
Selling, general, marketing and administrative    413      292  
     545      402  
             
Amortization of intangible assets related to acquisition transactions:            
Cost of Revenues    1,652      --   
Selling, general, marketing and administrative    254      --   
     1,906      --   
             
             
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 2011     30 June 2010  
  GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
  Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
             
Revenues  161,735  --   161,735  108,903  --   108,903
Cost of revenues  103,255  (3,986)  99,269  72,413  (134)  72,279
Gross profit  58,480  3,986  62,466  36,490  134  36,624
  36%   39% 34%   34%
Research and development expenses:            
Expenses incurred  17,726  (113)  17,613  9,472  (78)  9,394
Less - grants  1,735  --   1,735  1,485  --   1,485
   15,991  (113)  15,878  7,987  (78)  7,909
Selling, marketing, general and administrative expenses  41,299  (1,277)  40,022  29,856  (522)  29,334
Costs related to acquisition transactions   256  (256)  --   --   --   -- 
Operating income (loss)  934  5,632  6,566  (1,353)  734  (619)
Financial income (expenses), net   (737)  --   (737)  10  --   10
Other income   1,826  (1,826)  --   --   --   -- 
Income (loss) before taxes on income  2,023  3,806  5,829  (1,343)  734  (609)
Taxes on income (tax benefit)  644  --   644  (652)  --   (652)
Net income (loss)  1,379  3,806  5,185  (691)  734  43
             
Basic net earnings (loss) per share  0.03    0.13  (0.02)    0.00
Diluted net earnings (loss) per share  0.03    0.12  (0.02)    0.00
             
Weighted average number of shares used in             
computing net earnings (loss) per share             
Basic  40,807    40,807  40,356    40,356
Diluted  42,114    42,972  40,356    42,703
             
(1) Adjustments reflect the effect of non-cash stock options expenses as per SFAS123R, costs related to             
 acquisition transactions, amortization of intangible assets related to acquisition transactions and other income.            
             
     Six months ended       Six months ended   
    30 June 2011     30 June 2010  
Non-cash stock-based compensation expenses:            
Cost of Revenues    154      134  
Research and development    113      78  
Selling, general, marketing and administrative    789      522  
     1,056      734  
             
Amortization of intangible assets related to acquisition transactions:            
Cost of Revenues    3,832      --   
Selling, general, marketing and administrative    488      --   
     4,320      --   
         
         
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,
  2011 2010 2011 2010
  Unaudited Unaudited Unaudited Unaudited
         
Revenues  161,735  108,903  81,708  51,791
Cost of revenues  103,255  72,413  52,288  34,938
Gross profit  58,480  36,490  29,420  16,853
Research and development expenses:        
Expenses incurred  17,726  9,472  8,859  4,749
Less - grants  1,735  1,485  1,264  1,270
   15,991  7,987  7,595  3,479
Selling, marketing, general and administrative expenses  41,299  29,856  21,570  14,783
Costs related to acquisition transactions   256  --   100  -- 
Operating income (loss)  934  (1,353)  155  (1,409)
Financial income (expenses), net   (737)  10  (61)  (59)
Other income   1,826  --   877  -- 
Income (loss) before taxes on income  2,023  (1,343)  971  (1,468)
Taxes on income (tax benefit)  644  (652)  32  (135)
Net income (loss)  1,379  (691)  939  (1,333)
         
Basic net earnings (loss) per share  0.03  (0.02)  0.02  (0.03)
Diluted net earnings (loss) per share  0.03  (0.02)  0.02  (0.03)
         
Weighted average number of shares used in         
computing net earnings (loss) per share        
Basic 40,807 40,356 40,869 40,403
Diluted 42,114 40,356 42,091 40,403
         
         
GILAT SATELLITE NETWORKS LTD.        
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS    
US dollars in thousands        
         
  Six months ended Three months ended
  June 30, June 30,
  2011 2010 2011 2010
  Unaudited Unaudited Unaudited Unaudited
         
Cash flows from operating activities:        
Net income (loss)  1,379  (691)  939  (1,333)
Adjustments required to reconcile net income        
to net cash used in operating activities:        
Depreciation and amortization  12,369  6,218  5,797  3,205
Stock-based compensation related to employees  1,056  734  545  402
Accrued severance pay, net  (193)  241  (130)  127
Accrued interest and exchange rate differences on short and long-term restricted cash, net  (28)  19  (8)  168
Accrued interest and exchange rate differences on marketable securities and short term bank deposits, net  --   110  --   171
Exchange rate differences on long-term loans  522  (915)  120  (495)
Exchange rate differences on loans to employees  --   1  --   1
Capital loss from disposal of property and equipment  69  245  44  238
Deferred income taxes  370  6  (85)  (5)
Decrease (increase) in trade receivables, net  19  1,602  (806)  10,384
Increase in other assets (including short-term, long-term and deferred charges)  (18,923)  (2,143)  (6,706)  (2,356)
Decrease (increase) in inventories  (986)  (871)  183  1,036
Increase (decrease) in trade payables  (424)  92  (1,294)  1,106
Decrease in accrued expenses  (1,022)  (626)  (1,334)  (1,827)
Increase (decrease) in advances from customer, held by trustees, net   (1,004)  4,532  --   5,813
Increase (decrease) in other accounts payable and other long term liabilities  (1,562)  (274)  (3,903)  1,303
         
Net cash provided by (used in) operating activities  (8,358)  8,280  (6,638)  17,938
         
         
GILAT SATELLITE NETWORKS LTD.        
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS    
US dollars in thousands        
         
         
  Six months ended Three months ended
  June 30, June 30,
  2011 2010 2011 2010
  Unaudited Unaudited Unaudited Unaudited
Cash flows from investing activities:        
Purchase of property and equipment  (3,892)  (3,725)  (2,016)  (2,732)
Investment in bank deposits  --   (30,693)  --   -- 
Proceeds from bank deposits  --   39,877  --   31,924
Purchase of available-for-sale marketable securities  --   (4,804)  --   -- 
Loans to employees, net  (11)  1  (1)  2
Investment in restricted cash held by trustees  --   (11,110)  --   (9,706)
Proceeds from restricted cash held by trustees  1,016  6,555  --   3,768
Investment in restricted cash (including long-term)  (12,142)  (421)  (1,066)  (34)
Proceeds from restricted cash (including long-term)  14,091  1,332  7,223  1,262
Proceeds from working capital adjustment to subsidiary purchase price  1,465  --   1,465  -- 
Acquisitions of subsidiaries, net of cash acquired  (1,867)  --   (1,867)  -- 
Purchase of intangible asset  (21)  --   (8)  -- 
Net cash provided by (used in) investing activities  (1,361)  (2,988)  3,730  24,484
         
         
Cash flows from financing activities:        
Repayment of convertible notes  (394)  (420)  (394)  (420)
Issuance of restricted stock units and exercise of stock options  14  10  8  5
Short-term bank credit, net  (275)  --   667  -- 
Repayment of long-term loans  (852)  (166)  (578)  (79)
Net cash used in financing activities  (1,507)  (576)  (297)  (494)
         
Effect of exchange rate changes on cash and cash equivalents  102  (79)  70  (20)
         
Increase (decrease) in cash and cash equivalents  (11,124)  4,637  (3,135)  41,908
         
Cash and cash equivalents at the beginning of the period  57,238  122,672  49,249  85,401
         
Cash and cash equivalents at the end of the period  46,114  127,309  46,114  127,309
         
         
GILAT SATELLITE NETWORKS LTD.        
CONDENSED EBITDA        
US dollars in thousands        
  Six months ended Three months ended
  June 30, June 30,
  2011 2010 2011 2010
  Unaudited Unaudited Unaudited Unaudited
         
Operating income (loss)  934  (1,353)  155  (1,409)
Add:        
Non-cash stock-based compensation expenses  1,056  734  545  402
Costs related to acquisition transactions  256  --   100  -- 
Deprecation and amortization  12,369  6,218  5,797  3,205
EBITDA  14,615  5,599  6,597  2,198


            

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