GILTF Gilat Satellite Networks Ltd. (MM)

Gilat Satellite Networks Ltd. (Nasdaq:GILTF), a worldwide leader in satellite networking technology, today reported its results for the quarter ending March 31, 2005. Revenues for the first quarter of 2005 were $US53.0 million and net loss was US$(1.1) million or US$(0.05) diluted per share. By comparison, revenues for the first quarter of 2004 were US$57.4 million and net loss was US$(6.5) million or US$(0.29) diluted per share. The net loss for the first quarter of 2004 includes inventory write offs in the amount of US$2.0 million. Included in the first quarter of 2005 results are US$5.4 million in depreciation and amortization expenses as compared to US$8.1 million for the same period last year. The Company reported total cash balances (including cash and cash equivalents, short- and long-term restricted cash and restricted cash held by trustees less short-term bank credits) of US$112.2 million as of March 31, 2005, a decrease of US$10.7 million from the cash balance of US$122.9 million as of December 31, 2004. Gilat's Board of Directors today appointed Mr. Erez Antebi to the position of Chief Executive Officer (CEO) of Gilat Network Systems (GNS), a business unit of Gilat Satellite Networks Ltd. The appointment will be in effect as of June 1, 2005. Mr. Antebi is re-joining Gilat after serving as the CEO of Clariton Ltd. In his last position in Gilat, Mr. Antebi served as Gilat's Chief Operating Officer (COO). Other senior positions held by Mr. Antebi in Gilat were: Vice President, General Manager for Asia, Africa and Pacific Rim and Vice President and General Manager of Gilat's subsidiary in the United States. Mr. Antebi joined Gilat in May 1991 as Product Manager for the Skystar Advantage VSAT product. Prior to joining Gilat, Mr Antebi gained initial experience as an R&D engineer at Rafael and later as Product Manager at Tadiran responsible for international sales of its military HF radios. Mr. Antebi holds a B.Sc. and an M.Sc. Electrical Engineering from the Technion - Israel Institute of Technology. Gilat Chief Executive Officer and Chairman of the Board Shlomo Rodav said, "Gilat continues executing its strategy of focusing on bottom line results while providing specific sales solutions for target markets. We are witness to an excellent acceptance of our new product family, the SkyEdge(TM). The installed base is growing steadily and until now, we have shipped over 5,000 SkyEdge(TM) VSATs worldwide. We have completed the formation of the two business units and appointed Mr. Erez Antebi to CEO of GNS. With over 15 years of experience in the satellite communications industry, Mr. Antebi is one of the leading experts in this field. His in-depth knowledge of the VSAT technology, understanding of the various market segments, familiarity with Gilat's vast customer base and close acquaintance with Gilat, are valuable assets that will allow the Company to better position itself on the pace of growth and success in changing market environments." First Quarter Events Continued deal funnel - Gilat announced new deals -- Spacenet Inc. has been selected by Wendy's Restaurants of Rochester, to provide a Connexstar broadband satellite network to 123 Wendy's restaurants in New York, Pennsylvania, Indiana, Michigan and Ohio. The Connexstar VSAT high-speed network supports remote control solutions, point-of-sale (POS) polling, Internet access and other important retail networking applications. Wendy's of Rochester will also use the VSAT network for fast credit/debit card authorization. -- Spacenet Inc. expanded its reach with global broadband services for multinational corporations. Spacenet Global Services offers customers a single-source provider for WAN connectivity and managed networks worldwide. Spacenet is establishing a series of alliances with leading regional service operators that will enable the management and integration of networks across the world and the delivery of uniform, high-quality connectivity. -- Spacenet Inc. has been selected to deploy broadband satellite service to 237 Arby's restaurants nationwide. The Connexstar VSAT high-speed satellite network supports retail networking applications that include fast credit authorization, point-of-sale polling and a corporate intranet connection between 237 Arby's restaurants and its corporate headquarters in Fort Lauderdale, Fla, owned and operated by the company's second largest franchisee, Sybra, Inc. About Gilat Satellite Networks Ltd. Gilat Satellite Networks Ltd. (Nasdaq: GILTF) is a leading provider of products and services for satellite-based communications networks. The Company operates under two business units: (i) Gilat Network Systems ("GNS"), which is a provider of network systems and associated professional services to service providers and operators and (ii) Spacenet, which provides managed services for businesses and governments through its Connexstar service brand, for consumers through its StarBand service brand and for rural communities through Spacenet Rural Communications. Gilat was founded in 1987 and has shipped over 550,000 Very Small Aperture Terminals (VSATs) to more than 80 countries across six continents. Gilat's headquarters is located in Petah Tikva, Israel. The Company has 14 local offices and 3 service facilities worldwide. Gilat markets the SkyEdge(TM) Product Family which includes the SkyEdge(TM) Pro, SkyEdge(TM) IP, SkyEdge(TM) Call, SkyEdge(TM) DVB-RCS and SkyEdge(TM) Gateway. In addition, the Company markets numerous other legacy products. Visit Gilat 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. -0- *T Gilat Satellite Networks Ltd. Condensed Consolidated Balance Sheet US dollars in thousands March 31, December 31, 2005 2004 ----------- ------------ Unaudited Unaudited ----------- ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents 68,336 75,771 Short-term restricted cash 13,254 14,168 Restricted cash held by trustees 7,790 10,620 Trade receivables (net of allowance for doubtful accounts) 33,662 31,380 Inventories 20,386 23,277 Receivables in respect of capital leases, prepaid expenses and other accounts receivable 27,616 27,413 ----------- ------------ Total current assets 171,044 182,629 ----------- ------------ LONG-TERM INVESTMENTS AND RECEIVABLES: Long-term restricted cash 7,180 7,534 Long-term restricted cash held by trustees 19,002 18,994 Severance pay fund 8,242 7,933 Long-term trade receivables, receivables in respect of capital leases and other receivables, net 28,245 27,728 ----------- ------------ 62,669 62,189 ----------- ------------ PROPERTY AND EQUIPMENT, NET 135,236 137,198 ----------- ------------ INTANGIBLE ASSETS AND DEFERRED CHARGES, NET 9,640 9,432 ----------- ------------ TOTAL ASSETS 378,589 391,448 =========== ============ March 31, December 31, 2005 2004 ----------- ------------ Unaudited Unaudited ----------- ------------ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term bank credit 3,404 4,159 Current maturities of long-term loans 10,383 8,869 Trade payables 18,512 21,245 Accrued expenses 24,827 28,011 Short-term advances from customer held by trustees 14,078 13,500 Other accounts payable 39,139 40,048 ----------- ------------ Total current liabilities 110,343 115,832 ----------- ------------ LONG-TERM LIABILITIES: Accrued severance pay 8,188 8,172 Long-term advances from customer held by trustees 37,825 40,226 Long-term loans, net of current maturities 105,451 108,182 Accrued interest related to restructured debt 15,296 16,793 Other long-term liabilities 16,447 15,951 Excess of losses over investment in affiliates 1,702 2,102 Convertible subordinated notes 16,171 16,171 ----------- ------------ Total long-term liabilities 201,080 207,597 ----------- ------------ COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Share capital - Ordinary shares of NIS 0.2 par value 986 984 Additional paid in capital 718,280 718,096 Accumulated other comprehensive loss (2,594) (2,624) Accumulated deficit (649,506) (648,437) ----------- ------------ Total shareholders' equity 67,166 68,019 ----------- ------------ Total liabilities and shareholders' equity 378,589 391,448 =========== ============ Gilat Satellite Networks Ltd. Condensed Consolidated Statements of Operations US dollars in thousands Three months ended March 31, 2005 2004 ------------ ---------- Unaudited Unaudited ------------ ---------- Revenues 53,038 57,414 Cost of Revenues 35,159 42,205 Write-off of inventories - 2,000 ------------ ---------- Gross profit 17,879 13,209 ------------ ---------- Research and development expenses: Expenses incurred 4,832 4,685 Less - grants 769 1,552 ------------ ---------- 4,063 3,133 ------------ ---------- Selling, marketing, general and administrative expenses 14,506 17,370 ------------ ---------- Operating Loss (690) (7,294) ------------ ---------- Financial income - net 701 582 Other expenses (159) - ------------ ---------- Loss before taxes on income (148) (6,712) ------------ ---------- Taxes on income 1,321 585 ------------ ---------- Loss after taxes on income (1,469) (7,297) ------------ ---------- Equity in profits of affiliated companies 400 Minority interest in losses of a subsidiary - 164 ------------ ---------- Net loss from continuing operations (1,069) (7,133) ------------ ---------- Gain from cumulative effect of a change in an accounting principle - 611 ------------ ---------- Net loss (1,069) (6,522) ============ ========== Basic net loss per share (0.05) (0.29) ============ ========== Diluted net loss per share (0.05) (0.29) ============ ========== Shares used in basic net income per share computation 22,323 22,225 ============ ========== Shares used in diluted net income per share computation 22,323 22,225 ============ ========== *T