Edgar Filing: GILAT SATELLITE NETWORKS LTD

zk1110651.htm

FORM 6 – K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report on Foreign Issuer

Pursuant to Rule 13a – 16 or 15d – 16

of the Securities Exchange Act of 1934

For the Month of November 2011

Gilat Satellite Networks Ltd.

(Translation of Registrant’s Name into English)

Gilat House, Yegia Kapayim Street

Daniv Park, Kiryat Arye, Petah Tikva, Israel

(Address of Principal Corporate Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F x Form 40-F o

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

Attached hereto is Registrant’s press release dated November 15, 2011, announcing Registrant’s financial results for the third quarter ended September 30, 2011.

This Form 6-K is being incorporated by reference into the Registrant’s Form F-3 Registration Statement File Numbers 333-174142 and 333-160683 and Form S-8 Registration Statements File Numbers 333- 158476, 333-96630, 333-132649, 333-123410, 333-113932, 333-08826, 333-10092, 333-12466 and 333-12988.

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Gilat Satellite Networks Ltd. (Registrant)

Dated: November 15, 2011	By:	/s/ Joann R. Blasberg
		Joann R. Blasberg
		Corporate Secretary

Gilat Announces Third Quarter 2011 Results

Petah Tikva, Israel – November 15, 2011 – Gilat Satellite Networks Ltd. (NASDAQ: GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the quarter ending September 30, 2011.

Year-over-year Key Highlights (comparable quarter):

Quarterly revenues of $83.9 million, up 45%

Gross margin (non-GAAP) up from 35% to 37%

Operating income (non-GAAP) up from $1.0 million to $4.3 million

EBITDA of $8.1 million, up from EBITDA of $4.4 million

Revenues for the third quarter of 2011 were $83.9 million, compared to $58.0 million in the third quarter of 2010, up 45%. Operating income for the third quarter of 2011 was $1.9 million compared to an operating loss of $0.7 million in the third quarter of 2010. Net income for the third quarter of 2011 was $4.3 million, or $0.1 per diluted share, compared to a net income of $36.2 million, or $0.86 per diluted share, in the comparable period in 2010. It should be noted that the net income for the third quarter of 2011 and 2010 include one-time income from the sale of an investment and settlement agreement in the amount of $4.4 million and $37.3 million, respectively.

On a non-GAAP basis, operating income for the period was $4.3 million compared to an operating income of $1.0 million in the third quarter of 2010. Non-GAAP net income for the period was $2.3 million or $0.05 per diluted share, compared to a net income of $0.6 million, or $0.01 per diluted share, in the comparable period in 2010.

Gross margins for the third quarter of 2011 were 35% compared to 34% in the comparable period in 2010. On a non-GAAP basis, gross margins in the reported quarter were 37%, compared with 35% for the third quarter of 2010. EBITDA for the third quarter reached $8.1 million compared with $4.4 million in the third quarter last year.

Revenues for the nine months period ended September 30, 2011 were $245.6 million compared to $166.9 million in the comparable period of 2010. Net income for the nine months period in 2011 was $5.7 million, or $0.14 per diluted share, compared to a net income of $35.5 million, or $0.85 per diluted share, in the same period of 2010. It should be noted that the net income for the nine months ended September 30, 2011 and 2010 include one-time income mainly from the sale of an investment and settlement agreement in the amount of $4.4 million and $37.3 million, respectively.

On a non-GAAP basis, operating income for the nine months period ended September 30, 2011 was $10.9 million compared to an operating income of $0.8 million in the comparable period of 2010. Non-GAAP net income for the period was $7.5 million or $0.17 per diluted share, compared to a net income of $1.1 million, or $0.03 per diluted share, in the comparable period in 2010.

“In the third quarter, we saw a year-over-year improvement across all financial parameters as we increased our revenues, gross margin, EBITDA and operating income. We maintained strong performance in our bookings this quarter, with several significant contract wins from new as well as existing customers,” said Amiram Levinberg, Gilat’s Chief Executive Officer and Chairman of the Board. “Specifically of note is the progress we have made in our strategy to become a strong contender in the Ka-band arena, securing another major Ka-band win, this time in Russia with Rostelecom's RTComm and local government agency NIIR.”

On November 14, 2011 Gilat announced that it has entered into a strategic alliance with Russian-based service provider RTComm, the satellite service arm of Rostelecom Group, Russia’s national telecommunications operator, and with NIIR FSUE, an institute for technology advancement of the Ministry for Telecommunications and Mass Communications of the Russian Federation.

As part of these agreements, Gilat will supply network equipment and Ka-band end-user terminals for RTComm’s future constellation of multi spot-beam satellites. The cooperation between the parties includes the use of technology required for local manufacture in Russia.

Resources:

Third Quarter 2011 Financial Statements

Key Recent Announcements:

October 2011 - Gilat announced that its Board of Directors has appointed Erez Antebi as Chief Executive Officer of the Company, effective January 1, 2012. Amiram Levinberg, Gilat’s current CEO and Chairman of the Board intends to continue to serve as Chairman of the Board. Read

October 2011 - Gilat announced that its wholly owned subsidiary, Spacenet Inc., was selected by Cumberland Farms Inc. to upgrade and manage its communications infrastructure for over 600 stores across 11 states. Read

September 2011 – Gilat announced that its wholly owned subsidiary, Spacenet Inc., was selected to continue its provision of VSAT network services to a major retailer with thousands of locations in the U.S. The extension brings the contract value to $27 million. Read

September 2011 - Gilat announced that it has signed an agreement with a leading Latin American government agency for the delivery of over 1,800 SkyEdge II VSATs to facilitate broadband Internet connectivity in schools. Read

September 2011 - Gilat announced that it has signed an agreement for the delivery of its SkyAbis cellular backhaul solution, based on the SkyEdge II platform, to a leading South East Asian mobile network operator. Read

August 2011 - Gilat announced that it has been selected to provide a multi-million dollar SkyEdge™ II broadband network and services for security communications in Latin America. Read

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 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. 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. Read

Conference Call and Webcast Details:

Gilat management will host a conference call today at 14:30 GMT / 09:30 EST / 16:30 Israel Local 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) 281-1167.

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 November 17, 2011. International participants are invited to access the replay at (972) 3-925-5921, and US-based participants are invited to access the replay by dialing (888) 782-4291. 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 one million 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.

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.

Investor Contact:

Rob Fink, KCSA

Rfink@kcsa.com

1 (212) 896 1206

Chi-Chi Millaway,KCSA

Cmillaway@kcsa.com

1 (212) 896 1269

Media Contact:

Karen Mazor

Gilat Satellite Networks

karenm@gilat.com

GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
US dollars in thousands


	September 30,		December 31,
	2011		2010
	Unaudited

ASSETS

CURRENT ASSETS:
Cash and cash equivalents		44,495		57,238
Short-term restricted cash		4,215		3,839
Restricted cash held by trustees		2,613		1,004
Trade receivables, net		55,336		51,994
Inventories		31,788		29,612
Other current assets		25,705		22,973
Total current assets		164,152		166,660

LONG-TERM INVESTMENTS AND RECEIVABLES:
Long-term restricted cash		2,077		4,583
Severance pay fund		10,147		10,572
Long-term trade receivables, receivables in respect of capital
leases and other receivables		20,984		6,538
Total long-term investments and receivables		33,208		21,693

PROPERTY AND EQUIPMENT, NET		100,247		103,490

INTANGIBLE ASSETS, NET		52,105		57,453

GOODWILL		107,536		106,082

TOTAL ASSETS		457,248		455,378

GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
US dollars in thousands

	September 30,			December 31,
	2011			2010
	Unaudited

LIABILITIES AND EQUITY

CURRENT LIABILITIES:
Short-term bank credit		2,771			2,129
Current maturities of long-term loans and convertible notes		5,194			2,186
Trade payables		21,566			18,267
Accrued expenses		24,746			24,591
Short-term advances from customer, held by trustees		2,613			1,004
Other current liabilities		34,021			39,675

Total current liabilities		90,911			87,852

LONG-TERM LIABILITIES:
Accrued severance pay		9,891			10,579
Long-term loans, net		40,759			45,202
Accrued interest related to restructured debt		288			575
Convertible subordinated notes		14,374			14,379
Other long-term liabilities		30,137			32,678

Total long-term liabilities		95,449			103,413

COMMITMENTS AND CONTINGENCIES

EQUITY:
Share capital - ordinary shares of NIS 0.2 par value		1,875			1,855
Additional paid in capital		866,625			865,080
Accumulated other comprehensive income		304			774
Accumulated deficit		(597,916	)		(603,596	)

Total equity		270,888			264,113

TOTAL LIABILITIES AND EQUITY		457,248			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 September 2011									30 September 2010
		GAAP			Adjustments (1)			Non-GAAP			GAAP			Adjustments (1)			Non-GAAP
		Unaudited			Unaudited			Unaudited			Unaudited			Unaudited			Unaudited

Revenues			83,862			-			83,862			58,023			-			58,023
Cost of revenues			54,376			(1,731	)		52,645			38,073			(293	)		37,780
Gross profit			29,486			1,731			31,217			19,950			293			20,243
			35	%					37	%		34	%					35	%
Research and development expenses:
Expenses incurred			8,387			(61	)		8,326			5,380			(46	)		5,334
Less - grants			1,005			-			1,005			886			-			886
			7,382			(61	)		7,321			4,494			(46	)		4,448
Selling, marketing, general and administrative expenses			20,183			(572	)		19,611			15,375			(535	)		14,840
Costs related to acquisition transactions			-			-			-			759			(759	)		-
Operating income (loss)			1,921			2,364			4,285			(678	)		1,633			955
Financial expenses, net			(1,081	)		-			(1,081	)		(324	)		-			(324	)
Other income			4,385			(4,385	)		-			37,285			(37,285	)		-
Income before taxes on income			5,225			(2,021	)		3,204			36,283			(35,652	)		631
Taxes on income			924			-			924			74			-			74
Net income			4,301			(2,021	)		2,280			36,209			(35,652	)		557

Basic net earnings per share			0.10						0.06			0.89						0.01
Diluted net earnings per share			0.10						0.05			0.86						0.01

Weighted average number of shares used in
computing net earnings per share
	Basic		40,990						40,990			40,517						40,517
	Diluted		41,949						42,832			41,991						42,879

(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 September 2011		30 September 2010
Non-cash stock-based compensation expenses:
Cost of Revenues		72		70
Research and development		61		46
Selling, general, marketing and administrative		345		444
		478		560

Amortization of intangible assets related to acquisition transactions:
Cost of Revenues		1,659		223
Selling, general, marketing and administrative		227		91
		1,886		314

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
					30 September 2011									30 September 2010
		GAAP			Adjustments (1)			Non-GAAP			GAAP			Adjustments (1)			Non-GAAP
		Unaudited			Unaudited			Unaudited			Unaudited			Unaudited			Unaudited

Revenues			245,597			-			245,597			166,926			-			166,926
Cost of revenues			157,631			(5,717	)		151,914			110,486			(427	)		110,059
Gross profit			87,966			5,717			93,683			56,440			427			56,867
			36	%					38	%		34	%					34	%
Research and development expenses:
Expenses incurred			26,113			(174	)		25,939			14,852			(124	)		14,728
Less - grants			2,740			-			2,740			2,371			-			2,371
			23,373			(174	)		23,199			12,481			(124	)		12,357
Selling, marketing, general and administrative expenses			61,482			(1,849	)		59,633			44,760			(1,057	)		43,703
Costs related to acquisition transactions			256			(256	)		-			1,230			(1,230	)		-
Operating income (loss)			2,855			7,996			10,851			(2,031	)		2,838			807
Financial expenses, net			(1,818	)		-			(1,818	)		(314	)		-			(314	)
Other income			6,211			(6,211	)		-			37,285			(37,285	)		-
Income before taxes on income			7,248			1,785			9,033			34,940			(34,447	)		493
Taxes on income (tax benefit)			1,568			-			1,568			(578	)		-			(578	)
Net income			5,680			1,785			7,465			35,518			(34,447	)		1,071

Basic net earnings per share			0.14						0.18			0.88						0.03
Diluted net earnings per share			0.14						0.17			0.85						0.03

Weighted average number of shares used in
computing net earnings per share
	Basic		40,868						40,868			40,410						40,410
	Diluted		42,059						42,925			41,967						42,760

(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.

	Nine months ended		Nine months ended
	30 September 2011		30 September 2010
Non-cash stock-based compensation expenses:
Cost of Revenues		226		204
Research and development		174		124
Selling, general, marketing and administrative		1,134		966
		1,534		1,294

Amortization of intangible assets related to acquisition transactions:
Cost of Revenues		5,491		223
Selling, general, marketing and administrative		715		91
		6,206		314

GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except per share data)

	Nine months ended September 30,						Three months ended September 30,
	2011			2010			2011			2010
	Unaudited			Unaudited			Unaudited			Unaudited

Revenues		245,597			166,926			83,862			58,023
Cost of revenues		157,631			110,486			54,376			38,073
Gross profit		87,966			56,440			29,486			19,950
Research and development expenses:
Expenses incurred		26,113			14,852			8,387			5,380
Less - grants		2,740			2,371			1,005			886
		23,373			12,481			7,382			4,494
Selling, marketing, general and administrative expenses		61,482			44,760			20,183			15,375
Costs related to acquisition transactions		256			1,230			-			759
Operating income (loss)		2,855			(2,031	)		1,921			(678	)
Financial expenses, net		(1,818	)		(314	)		(1,081	)		(324	)
Other income		6,211			37,285			4,385			37,285
Income before taxes on income		7,248			34,940			5,225			36,283
Taxes on income (tax benefit)		1,568			(578	)		924			74
Net income		5,680			35,518			4,301			36,209

Basic net earnings per share		0.14			0.88			0.10			0.89
Diluted net earnings per share		0.14			0.85			0.10			0.86

Weighted average number of shares used in
computing net earnings per share
Basic		40,868			40,410			40,990			40,517
Diluted		42,059			41,967			41,949			41,991

GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands

	Nine months ended September 30,						Three months ended September 30,
	2011			2010			2011			2010
	Unaudited			Unaudited			Unaudited			Unaudited

Cash flows from operating activities:
Net income		5,680			35,518			4,301			36,209
Adjustments required to reconcile net income
to net cash used in operating activities:
Depreciation and amortization		18,051			9,939			5,682			3,721
Gain from the sale of an investment accounted for at cost		-			(24,314	)		-			(24,314	)
Stock-based compensation related to employees		1,534			1,294			478			560
Accrued severance pay, net		(264	)		(133	)		(71	)		(374	)
Accrued interest and exchange rate differences on
short and long-term restricted cash, net		231			(396	)		259			(415	)
Accrued interest and exchange rate differences on
marketable securities and short term bank deposits, net		-			(226	)		-			(336	)
Exchange rate differences on long-term loans		150			(308	)		(372	)		607
Exchange rate differences on loans to employees		(3	)		-			(3	)		(1	)
Capital loss from disposal of property and equipment		118			270			49			25
Deferred income taxes		1,161			(4	)		791			(10	)
Increase in trade receivables, net		(2,907	)		(6,295	)		(2,926	)		(7,897	)
Increase in other assets (including short-term, long-term
and deferred charges)		(19,227	)		(4,544	)		(304	)		(2,401	)
Decrease (increase) in inventories		(3,695	)		(362	)		(2,709	)		509
Increase (decrease) in trade payables		3,154			(3,700	)		3,578			(3,792	)
Increase (decrease) in accrued expenses		(564	)		(900	)		458			(274	)
Increase (decrease) in advances from customer, held
by trustees, net		1,609			2,025			2,613			(2,507	)
Increase (decrease) in other accounts payable and other long term liabilities		(10,379	)		1,654			(8,817	)		1,928
Net cash provided by (used in) operating activities		(5,351	)		9,518			3,007			1,238

GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands

	Nine months ended September 30,						Three months ended September 30,
	2011			2010			2011			2010
	Unaudited			Unaudited			Unaudited			Unaudited
Cash flows from investing activities:
Purchase of property and equipment		(6,104	)		(5,456	)		(2,212	)		(1,731	)
Proceeds from sale of an investment accounted for at cost		-			24,314			-			24,314
Investment in bank deposits		-			(30,693	)		-			-
Proceeds from bank deposits		-			39,877			-			-
Purchase of available-for-sale marketable securities		-			(4,804	)		-			-
Loans to employees, net		(7	)		4			4			3
Investment in restricted cash held by trustees		(6,320	)		(12,346	)		(6,320	)		(1,236	)
Proceeds from restricted cash held by trustees		4,447			10,710			3,431			4,155
Investment in restricted cash (including long-term)		(14,731	)		(463	)		(2,589	)		(42	)
Proceeds from restricted cash (including long-term)		16,969			1,334			2,878			2
Proceeds from working capital adjustment to subsidiary purchase price		1,465			-			-			-
Acquisitions of subsidiaries, net of cash acquired		(1,867	)		(26,317	)		-			(26,317	)
Purchase of intangible asset		(26	)		(2,500	)		(5	)		(2,500	)
Net cash used in investing activities		(6,174	)		(6,340	)		(4,813	)		(3,352	)

Cash flows from financing activities:
Repayment of convertible notes		(394	)		(839	)		-			(419	)
Issuance of restricted stock units and exercise of stock options		20			33			6			23
Short-term bank credit, net		642			227			917			227
Repayment of long-term loans		(1,047	)		(4,281	)		(195	)		(4,115	)
Net cash provided by (used in) financing activities		(779	)		(4,860	)		728			(4,284	)

Effect of exchange rate changes on cash and cash equivalents		(439	)		(18	)		(541	)		61

Decrease in cash and cash equivalents		(12,743	)		(1,700	)		(1,619	)		(6,337	)

Cash and cash equivalents at the beginning of the period		57,238			122,672			46,114			127,309

Cash and cash equivalents at the end of the period		44,495			120,972			44,495			120,972

GILAT SATELLITE NETWORKS LTD.
CONDENSED EBITDA
US dollars in thousands

	Nine months ended September 30,					Three months ended September 30,
	2011		2010			2011		2010
	Unaudited		Unaudited			Unaudited		Unaudited

Operating income (loss)		2,855		(2,031	)		1,921		(678	)
Add:
Non-cash stock-based compensation expenses		1,534		1,294			478		560
Costs related to acquisition transactions		256		1,230			-		759
Deprecation and amortization		18,051		9,939			5,682		3,721
EBITDA		22,696		10,432			8,081		4,362