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Gilat Announces Third Quarter 2012 Results

Gilat Satellite Networks Logo

PETAH TIKVA, Israel, Nov. 14, 2012 (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 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 30, December 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 30, December 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 months ended Three months ended
September 30, 2012 September 30, 2011

GAAP

Adjustments (1)
Non-GAAP
GAAP

Adjustments (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 months ended Three months ended
September 30, 2012 September 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 ended Nine months ended
September 30, 2012 September 30, 2011
GAAP Adjustments (1) Non-GAAP GAAP Adjustments (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 ended Nine months ended
September 30, 2012 September 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
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

Source:Gilat Satellite Networks Ltd.