updated 2/22/2011 7:46:03 AM ET 2011-02-22T12:46:03

PETAH TIKVA, Israel, Feb. 22, 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 fourth quarter and year ended December 31, 2010.

Key Highlights:

  • Quarterly revenues of $66.1 million, up 17% compared to fourth quarter 2009
  • Full year revenues increased to $233.0 million
  • Year-on-year operating income (non-GAAP basis) up from $0.3 million to $1.3 million

Revenues for the fourth quarter of 2010 were $66.1 million, compared to $56.6 million for the same period in 2009. Net loss for the fourth quarter of 2010 was $4.9 million or $0.12 per diluted share, compared to a net income of $0.3 million or $0.01 per diluted share in the fourth quarter of 2009. Non-GAAP operating income for the fourth quarter of 2010 was $0.5 million compared to $0.4 million in the fourth quarter of 2009.

Revenues for the twelve month period ended December 31, 2010 were $233.0 million, compared to $228.1 million in the comparable period of 2009. Net income for the twelve month period ended December 31, 2010 was $30.6 million or $0.73 per diluted share, compared to a net income of $1.9 million or $0.04 per diluted share, in the same period of 2009. Non-GAAP operating income for the year ended December 31, 2010 was $1.3 million compared to $0.3 million in full year 2009.

Executive Perspective:

"During 2010, we completed the acquisitions of RaySat Antenna Systems and Wavestream. This is part of our growth strategy to expand our business into the defense and homeland security markets, both in the U.S and internationally. We ended the year with a small increase in revenues and significant growth in backlog, from $180 million to over $232 million," said Amiram Levinberg, Gilat's Chief Executive Officer and Chairman of the Board. "We have set our financial management objectives for 2011 to increase our annual revenue to more than $330 million and improve our EBITDA margin to 10%."

Resources:

Fourth Quarter and Full Year 2010 Financial Statements

Recent Announcements:

In November 2010 -- Gilat has completed its previously announced acquisition of Wavestream Corporation. Wavestream's family of Ka, Ku, X and C-band Solid State Power Amplifiers (SSPA) and Block Upconverters (BUC) provide systems integrators with field-proven, high performance solutions designed for mobile and fixed satellite communication (SATCOM) systems worldwide. The company's products have been selected as key components in a number of DoD programs and it has an extensive tier-1 customer list of DoD system integrators. Read

In January 2011 -- the Ministry of Information Technology and Communications of Colombia, together with the country's National Fund of Development (FONADE), has extended and amended Gilat's agreements for the provision of services under the Rural Communitarian Telephony and Telecentros projects for an additional one-year term. The extended service agreements are valued at approximately $21 million. Read

Also in January 2011 -- Gilat expanded its leadership position in the US lottery market with multi-year contracts for over 27,000 lottery sites in Texas and Illinois. These recent awards were added to previous awards for Indiana, Louisiana and Iowa, totaling almost 33,000 sites across the five networks. Read

Earlier this month -- Gilat was selected by a defense agency to provide a broadband network for military communications. The network includes Ku and Ka band terminals and will serve various military branches and units as part of a single, unified multi-band communications network, providing mission critical applications and on the move communications. Read

Conference Call and Webcast Details:

Gilat management will host a conference call today at 14:30 GMT/9:30 EST 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) 281-1137.

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 17:00 GMT/12:00 EST today, until 17:00 GMT/12:00 EST February 24, 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) 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 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 16 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    
     
  December 31, December 31,
  2010 2009
  Unaudited  
     
ASSETS    
     
CURRENT ASSETS:    
Cash and cash equivalents  57,238  122,672
Short-term bank deposits  --   31,729
Short-term restricted cash  3,839  1,782
Restricted cash held by trustees  1,004  2,137
Trade receivables, net  51,994  45,597
Inventories  29,612  13,711
Other current assets  22,973  19,068
Total current assets  166,660  236,696
     
LONG-TERM INVESTMENTS AND RECEIVABLES:    
Long-term restricted cash  4,583  4,896
Severance pay fund  10,572  9,912
Long-term trade receivables, receivables in respect of capital leases and other receivables  6,538  2,204
Total long-term investments and receivables  21,693  17,012
     
PROPERTY AND EQUIPMENT, NET  103,490  100,532
     
INTANGIBLE ASSETS AND DEFERRED CHARGES, NET  57,453  2,988
     
GOODWILL  106,082  -- 
     
TOTAL ASSETS  455,378  357,228
     
     
GILAT SATELLITE NETWORKS LTD.    
CONDENSED CONSOLIDATED BALANCE SHEET    
US dollars in thousands    
  December 31, December 31,
  2010 2009
  Unaudited  
     
LIABILITIES AND EQUITY    
     
CURRENT LIABILITIES:    
Short-term bank credit  2,129  -- 
Current maturities of long-term loans and convertible notes  2,186  5,220
Trade payables   18,267  16,838
Accrued expenses   24,591  20,067
Short-term advances from customer, held by trustees  1,004  2,137
Other current liabilities  39,675  28,154
     
Total current liabilities  87,852  72,416
     
LONG-TERM LIABILITIES:    
Accrued severance pay  10,579  10,011
Long-term loans, net   45,202  9,830
Accrued interest related to restructured debt  575  1,176
Convertible subordinated notes  14,379  15,220
Other long-term liabilities  32,678  16,280
     
Total long-term liabilities  103,413  52,517
     
COMMITMENTS AND CONTINGENCIES    
     
EQUITY:    
Share capital - ordinary shares of NIS 0.2 par value   1,855  1,832
Additional paid in capital  865,080  863,337
Accumulated other comprehensive income  774  1,341
Accumulated deficit  (603,596)  (634,215)
     
Total equity  264,113  232,295
     
TOTAL LIABILITIES AND EQUITY  455,378  357,228
GILAT SATELLITE NETWORKS LTD.        
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS        
U.S. dollars in thousands (except per share data)        
  Year ended Three months ended
  December 31, December 31,
  2010 2009 2010 2009
  Unaudited   Unaudited Unaudited
         
Revenues  232,985  228,059  66,059  56,590
Cost of revenues  153,131  157,628  42,645  37,788
Gross profit  79,854  70,431  23,414  18,802
Research and development expenses:        
Expenses incurred  22,194  16,281  7,342  4,016
Less - grants  3,249  2,311  878  591
   18,945  13,970  6,464  3,425
Selling, marketing, general and administrative expenses  63,240  57,125  18,480  15,216
Costs related to acquisition transactions  3,842  --   2,612  -- 
Operating income (loss)  (6,173)  (664)  (4,142)  161
Financial income (expenses), net   (557)  1,050  (243)  391
Other income   37,360  2,396  75  -- 
Income (loss) before taxes on income  30,630  2,782  (4,310)  552
Taxes on income  11  904  589  203
Net income (loss)  30,619  1,878  (4,899)  349
         
Basic net earnings (loss) per share  0.76  0.05  (0.12)  0.01
Diluted net earnings (loss) per share  0.73  0.04  (0.12)  0.01
         
         
Weighted average number of shares used in computing net earnings (loss) per share    
Basic 40,467 40,159 40,639 40,245
Diluted 41,985 41,474 40,639 41,664
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)            
   Year ended   Year ended 
  31 December 2010 31 December 2009
  GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
  Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
             
Revenues  232,985  --   232,985  228,059  --   228,059
Cost of revenues  153,131  (1,939)  151,192  157,628  (173)  157,455
Gross profit  79,854  1,939  81,793  70,431  173  70,604
  34%   35% 31%   31%
Research and development expenses:            
Expenses incurred  22,194  (172)  22,022  16,281  (80)  16,201
Less - grants  3,249  --   3,249  2,311  --   2,311
   18,945  (172)  18,773  13,970  (80)  13,890
Selling, marketing, general and administrative expenses  63,240  (1,523)  61,717  57,125  (684)  56,441
Costs related to acquisition transactions   3,842  (3,842)  --   --   --   -- 
Operating income (loss)  (6,173)  7,476  1,303  (664)  937  273
Financial income (expenses), net   (557)  --   (557)  1,050  --   1,050
Other income   37,360  (37,360)  --   2,396  (2,396)  -- 
Income before taxes on income  30,630  (29,884)  746  2,782  (1,459)  1,323
Taxes on income  11  --   11  904  --   904
Net income   30,619  (29,884)  735  1,878  (1,459)  419
             
Basic net earnings per share  0.76    0.02  0.05    0.01
Diluted net earnings per share  0.73    0.02  0.04    0.01
             
Weighted average number of shares used in computing net earnings per share             
Basic  40,467    40,467  40,159    40,159
Diluted  41,985    42,806  41,474    42,418
             
(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.
             
     Year ended       Year ended   
    31 December 2010     31 December 2009  
Non-cash stock-based compensation expenses:            
Cost of Revenues    281      173  
Research and development    172      80  
Selling, general, marketing and administrative    1,273      684  
     1,726      937  
             
Amortization of intangible assets related to acquisition transactions:            
Cost of Revenues    1,658      --   
Selling, general, marketing and administrative    250      --   
     1,908      --   
             
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 
  31 December 2010 31 December 2009
  GAAP Adjustments (1) Non-GAAP GAAP Adjustments (1) Non-GAAP
  Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
             
Revenues  66,059  --   66,059  56,590  --   56,590
Cost of revenues  42,645  (1,512)  41,133  37,788  (53)  37,735
Gross profit  23,414  1,512  24,926  18,802  53  18,855
  35%   38% 33%   33%
Research and development expenses:            
Expenses incurred  7,342  (48)  7,294  4,016  (24)  3,992
Less - grants  878  --   878  591  --   591
   6,464  (48)  6,416  3,425  (24)  3,401
Selling, marketing, general and administrative expenses  18,480  (466)  18,014  15,216  (186)  15,030
Costs related to acquisition transactions   2,612  (2,612)  --   --   --   -- 
Operating income (loss)  (4,142)  4,639  497  161  263  424
Financial income (expenses), net   (243)  --   (243)  391  --   391
Other income   75  (75)  --   --   --   -- 
Income (loss) before taxes on income  (4,310)  4,564  254  552  263  815
Taxes on income  589  --   589  203  --   203
Net income (loss)  (4,899)  4,564  (335)  349  263  612
             
Basic net earnings (loss) per share  (0.12)    (0.01)  0.01    0.02
Diluted net earnings (loss) per share  (0.12)    (0.01)  0.01    0.01
             
Weighted average number of shares used in computing net earnings (loss) per share             
Basic  40,639    40,639  40,245    40,245
Diluted  40,639    40,639  41,664    42,431
             
             
(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   
    31 December 2010     31 December 2009  
Non-cash stock-based compensation expenses:            
Cost of Revenues    77      53  
Research and development    48      24  
Selling, general, marketing and administrative    307      186  
     432      263  
             
Amortization of intangible assets related to acquisition transactions:            
Cost of Revenues    1,435      --   
Selling, general, marketing and administrative    159      --   
     1,595      --   
GILAT SATELLITE NETWORKS LTD.        
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS        
US dollars in thousands        
         
  Year ended Three months ended
  December 31, December 31,
  2010 2009 2010 2009
  Unaudited   Unaudited Unaudited
         
Cash flows from operating activities:        
Net income (loss)  30,619  1,878  (4,899)  349
Adjustments required to reconcile net income to net cash provided by (used in) operating activities:        
Depreciation and amortization  14,794  14,509  4,855  3,645
Gain from redemption of convertible notes  --   (78)  --   (56)
Gain from the sale of an investment accounted for at cost  (24,314)  (2,597)  --   -- 
Stock-based compensation related to employees  1,726  937  432  263
Accrued severance pay, net  (135)  (1,113)  (2)  (298)
Accrued interest and exchange rate differences on short and long-term restricted cash, net  (201)  256  195  103
Accrued interest and exchange rate differences on marketable securities and short term bank deposits, net  (45)  (349)  181  (17)
Exchange rate differences on long-term loans  (415)  212  (107)  (108)
Exchange rate differences on loans to employees  --   (5)  --   (1)
Capital loss from disposal of property and equipment  270  163  --   26
Deferred income taxes  (250)  992  (246)  669
Decrease (increase) in trade receivables, net  (1,562)  14,294  4,733  1,206
Decrease (increase) in other assets (including short-term, long-term and deferred charges)  (5,559)  6,530  (1,015)  (860)
Decrease (increase) in inventories  (2,946)  8,995  (2,584)  1,676
Increase (decrease) in trade payables  (4,759)  (6,855)  (1,059)  4,542
Increase (decrease) in accrued expenses  2,256  (6,034)  3,156  (3,549)
Increase (decrease) in advances from customer, held by trustees, net   (1,133)  (22,032)  (3,158)  (3,274)
Increase (decrease) in other accounts payable and other long term liabilities  4,574  (9,909)  2,920  1,530
Net cash provided by (used in) operating activities  12,920  (206)  3,402  5,846
         
         
GILAT SATELLITE NETWORKS LTD.        
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS        
US dollars in thousands        
         
  Year ended Three months ended
  December 31, December 31,
  2010 2009 2010 2009
  Unaudited   Unaudited Unaudited
Cash flows from investing activities:        
Purchase of property and equipment  (7,638)  (4,485)  (2,182)  (1,544)
Proceeds from sale of an investment accounted for at cost  24,314  2,597  --   -- 
Purchase of held-to-maturity marketable securities and deposits  (30,693)  (130,961)  --   (31,691)
Proceeds from held-to-maturity marketable securities and deposits  62,384  162,615  22,507  25,193
Purchase of available-for-sale marketable securities  (4,804)  --   --   -- 
Proceeds from available-for-sale marketable securities  4,888  --   4,888  -- 
Loans to employees, net  14  39  10  4
Investment in restricted cash held by trustees  (12,346)  (3,056)  --   (3,056)
Proceeds from restricted cash held by trustees  13,673  24,834  2,963  6,225
Investment in restricted cash (including long-term)  (2,941)  (90)  (2,478)  (3)
Proceeds from restricted cash (including long-term)  1,339  7,696  5  6,667
Acquisitions of subsidiaries, net of cash acquired  (153,883)  --   (127,566)  -- 
Purchase of intangible asset  (2,515)  --   (15)  -- 
Net cash provided by (used in) investing activities  (108,208)  59,189  (101,868)  1,795
         
         
Cash flows from financing activities:        
Repayment of convertible notes  (839)  --   --   -- 
Early redemption of convertible notes  --   (170)  --   (125)
Issuance of restricted stock units and exercise of stock options  39  11  6  2
Short-term bank credit, net  (946)  (6,500)  (1,173)  (6,500)
Proceeds from long-term loans  40,000  --   40,000  -- 
Repayment of long-term loans  (8,409)  (4,350)  (4,128)  (91)
Net cash used in financing activities  29,845  (11,009)  34,705  (6,714)
         
Effect of exchange rate changes on cash and cash equivalents  9  782  27  50
         
Increase (decrease) in cash and cash equivalents  (65,434)  48,756  (63,734)  977
         
Cash and cash equivalents at the beginning of the period  122,672  73,916  120,972  121,695
         
Cash and cash equivalents at the end of the period  57,238  122,672  57,238  122,672
GILAT SATELLITE NETWORKS LTD.        
CONDENSED EBITDA        
US dollars in thousands        
  Year ended Three months ended
  December 31, December 31,
  2010 2009 2010 2009
  Unaudited Unaudited Unaudited Unaudited
         
Operating income  (6,173)  (664)  (4,142)  161
Add:        
Non-cash stock-based compensation expenses  1,726  937  432  263
Costs related to acquisition transactions  3,842  --   2,612  -- 
Deprecation and amortization  14,794  14,509  4,855  3,645
EBITDA  14,189  14,782  3,757  4,069
CONTACT:  Media Contact:
          Karen Mazor
          Gilat Satellite Networks
          (972) 54 228 8039
          karenm@gilat.com
         
          Amir Aisenberg/Itay Gurmez
          Aisenberg Eliash Communications
          (972) 3 753 8828
         
          Investor Contact:
          Jeff Corbin/ Marybeth Csaby
          KCSA Strategic Communications
          (212) 896-1214/ (212) 896-1236
          gilat@kcsa.com

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