zk1313882.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 2013

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 13, 2013, announcing Registrant’s financial results for the third quarter 2013.
 
We consent to the incorporation by reference in the Registration Statements on Form F-3 (registration nos. 333-160683 and no. 333-174142) and registration statements on form s-8 (registration nos. 333-96630, 333-113932, 333-123410, 333-132649, 333-158476, 333-180552 and 333-187021).
 
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 13, 2013
By:
/s/ Alon Levy
 
   
Alon Levy
 
   
General Counsel
 

 
2

 
 
Gilat Announces Third Quarter 2013 Results

Petah Tikva, Israel – November 13, 2013 Gilat Satellite Networks Ltd. (NASDAQ, TASE: GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the third quarter ended September 30, 2013.
 
Key Financial Updates:
 
·
Revenue for Q3 2013 of $71.3 million
 
·
EBITDA for Q3 2013 of $2.1 million
 
·
Expenses reduced by around $9 million per year during Q4 2013 with effects to be realized starting in Q1 2014
 
·
Management objectives for 2013 lowered to approximately $310 million in revenue and EBITDA of 6% primarily due to delayed deals in our Commercial Division and in Peru

Revenues for the third quarter of 2013 were $71.3 million, compared to $89.0 million for the same period in 2012.

On a non-GAAP basis, operating loss for the third quarter of 2013 was $1.3 million compared to an operating income of $5.7 million in the third quarter of 2012. On a non-GAAP basis, net loss for the period was $1.9 million, or $0.04 per diluted share, compared to net income of $5.8 million, or $0.13 per diluted share, in the comparable period in 2012.

EBITDA for the third quarter of 2013 reached $2.1 million as compared with $9.8 million in the comparable period in 2012.

In August, the Company announced that it entered into a definitive agreement to sell Spacenet to SageNet, subject to regulatory approval and the satisfaction of customary closing conditions. The Company received the required FCC regulatory approval last week and notified SageNet that all conditions for closing have been met. The Company has been notified by SageNet that it is not willing to proceed to closing at this time based on several assertions. While the Company rejects all of SageNet's assertions and believes them to be unfounded, it is in continuing discussions with SageNet concerning their assertions. At this time the closing has been delayed.

“The shortfall in Q3 was mainly attributed to two deals which were delayed in our Commercial Division, reduced revenue from Compartel in Colombia and a delayed project implementation in our Services Division,” said Erez Antebi, CEO of Gilat.

“We have taken immediate action to cut costs reducing our global headcount and fixed expenses by approximately $9 million annually,” continued Antebi. “We expect to see most of the impact of the reductions beginning in the first quarter of 2014. It is important to note that we have taken care not to reduce our sales teams or our research and development investments in our strategic growth areas.”
 
3

 
 
“Going forward, we believe we are well positioned for success,” concluded Antebi. “While this has been a difficult quarter, we have taken the appropriate measures to significantly cut costs and further streamline the company. We continue to close deals in our Commercial Division with new and existing customers. Our Defense Division is stable and we see growing interest and need for our products. We are confident in the road ahead and believe that with the steps we have taken, the Company is better positioned to succeed going forward.”
 
Resources:
 
Third Quarter 2013 Financial Statements
 
Key Recent Announcements:
 
-
Gilat Receives Award Letter from Entel S.A. for Project Valued at Over $12 Million
 
-
Gilat Announces a Favorable Judgment in 2009 Claim
 
-
Gilat Announces the Release of the Wavestream Ka-Band Matchbox Mini BUC
 
-
Gilat Announces Sale of Spacenet Subsidiary
 
Conference Call and Webcast Details:
 
Gilat management will host a conference call today at 13:30 GMT/ 09:30 EST/ 16:30 IST (Israel Standard Time) to discuss the results. International participants are invited to access the call at (972) 3-918-0610, 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 16:00 GMT/ 12:00 EST/ 19:00 IST today, until 16:00 GMT/ 12:00 EST/ 19:00 IST November 15, 2013.  International participants are invited to access the replay at (972) 3-925-5918, 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, 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.
 
 
4

 
 
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, 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
 
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.
 
Contact:
 
Phil Carlson / Josh Dver, KCSA
David Leichner, Gilat Satellite Networks Ltd.
pcarlson@kcsa.com / jdver@kcsa.com
davidle@gilat.com
1 (212) 896 1233 / 1239
(972) 3 925 2009

 
5

 
 
GILAT SATELLITE NETWORKS LTD.
           
CONDENSED CONSOLIDATED BALANCE SHEETS
           
US dollars in thousands
           
 
   
September 30,
   
December 31,
 
   
2013
   
2012
 
   
Unaudited
       
             
ASSETS
           
             
CURRENT ASSETS:
           
Cash and cash equivalents
    53,914       66,968  
Restricted cash
    1,869       3,794  
Restricted cash held by trustees
    4,544       1,664  
Trade receivables, net
    59,194       60,991  
Inventories
    31,560       24,973  
Other current assets
    24,820       29,140  
Total current assets
    175,901       187,530  
                 
LONG-TERM INVESTMENTS AND RECEIVABLES:
               
Long-term restricted cash
    1,184       1,151  
Severance pay funds
    9,805       9,703  
Long-term trade receivables, receivables in respect of capital
               
   leases and other receivables
    20,332       19,781  
Total long-term investments and receivables
    31,321       30,635  
                 
PROPERTY AND EQUIPMENT, NET
    91,233       94,727  
                 
INTANGIBLE ASSETS, NET
    30,787       35,991  
                 
GOODWILL
    65,760       65,760  
                 
TOTAL ASSETS
    395,002       414,643  
 
 
6

 
 
GILAT SATELLITE NETWORKS LTD.
       
CONDENSED CONSOLIDATED BALANCE SHEETS
       
US dollars in thousands
       
 
   
September 30,
   
December 31,
 
   
2013
   
2012
 
   
Unaudited
       
             
LIABILITIES AND EQUITY
           
             
CURRENT LIABILITIES:
           
Short-term bank credit
    3,426       3,517  
Current maturities of long-term loans
    4,621       7,963  
Trade payables
    28,233       23,240  
Accrued expenses
    19,775       24,353  
Short-term advances from customer, held by trustees
    -       4,448  
Other current liabilities
    41,893       40,336  
Total current liabilities
    97,948       103,857  
                 
LONG-TERM LIABILITIES:
               
Accrued severance pay
    9,614       9,513  
Long-term loans, net of current maturities
    31,376       40,747  
Other long-term liabilities
    23,334       18,569  
Total long-term liabilities
    64,324       68,829  
                 
COMMITMENTS AND CONTINGENCIES
               
                 
EQUITY:
               
Share capital - ordinary shares of NIS 0.2 par value
    1,929       1,909  
Additional paid-in capital
    872,244       869,822  
Accumulated other comprehensive income
    1,571       2,864  
Accumulated deficit
    (643,014 )     (632,638 )
                 
Total equity
    232,730       241,957  
                 
TOTAL LIABILITIES AND EQUITY
    395,002       414,643  
 
 
7

 
 
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 2013
   
30 September 2012
 
     
GAAP
   
Adjustments (1)
   
Non-GAAP
   
GAAP
   
Adjustments (1)
   
Non-GAAP
 
     
Unaudited
   
Unaudited
   
Unaudited
   
Unaudited
   
Unaudited
   
Unaudited
 
                                       
Revenues
      71,303       -       71,303       89,009       -       89,009  
Cost of revenues
    50,904       (1,305 )     49,599       60,588       (1,661 )     58,927  
Gross profit
    20,399       1,305       21,704       28,421       1,661       30,082  
        29 %             30 %     32 %             34 %
Research and development expenses:
                                               
Expenses incurred
    7,088       (128 )     6,960       7,699       (114 )     7,585  
Less - grants
    585       -       585       661       -       661  
        6,503       (128 )     6,375       7,038       (114 )     6,924  
Selling and marketing expenses
    9,159       (360 )     8,799       9,346       (345 )     9,001  
General and administrative expenses
    8,185       (377 )     7,808       8,840       (384 )     8,456  
Operating income (loss)
    (3,448 )     2,170       (1,278 )     3,197       2,504       5,701  
Financial expenses, net
    (1,579 )     -       (1,579 )     (412 )     -       (412 )
Income (loss) before taxes on income
    (5,027 )     2,170       (2,857 )     2,785       2,504       5,289  
Tax benefit
    (983 )     -       (983 )     (536 )     -       (536 )
Net income (loss)
    (4,044 )     2,170       (1,874 )     3,321       2,504       5,825  
                                                   
Basic net earnings (loss) per share
    (0.10 )             (0.04 )     0.08               0.14  
Diluted net earnings (loss) per share
    (0.10 )             (0.04 )     0.08               0.13  
                                                   
Weighted average number of shares used in
                                               
   computing net earnings (loss) per share
                                               
 
    Basic
    42,048               42,048       41,462               41,462  
 
    Diluted
    42,048               42,048       42,302               43,807  
                                                   
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718 and amortization of intangible assets related to acquisition transactions.
         
                                                 
             
Three months ended
                   
Three months ended
         
             
30 September 2013
                   
30 September 2012
         
             
Unaudited
                   
Unaudited
         
Non-cash stock-based compensation expenses:
                                               
Cost of revenues
            57                       88          
Research and development
            128                       114          
Selling and marketing
            129                       116          
General and administrative
            377                       384          
                691                       702          
                                                   
Amortization of intangible assets related to acquisition transactions:
                                 
Cost of revenues
            1,248                       1,573          
Selling and marketing
            231                       229          
                1,479                       1,802          
 
 
8

 
 
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 2013
   
30 September 2012
 
     
GAAP
   
Adjustments (1)
   
Non-GAAP
   
GAAP
   
Adjustments (1)
   
Non-GAAP
 
     
Unaudited
   
Unaudited
   
Unaudited
   
Unaudited
   
Unaudited
   
Unaudited
 
                                       
Revenues
      234,336       -       234,336       250,935       -       250,935  
Cost of revenues
    164,274       (3,888 )     160,386       170,796       (4,948 )     165,848  
Gross profit
    70,062       3,888       73,950       80,139       4,948       85,087  
        30 %             32 %     32 %             34 %
Research and development expenses:
                                               
Expenses incurred
    21,864       (339 )     21,525       24,274       (243 )     24,031  
Less - grants
    1,449       -       1,449       2,345       -       2,345  
        20,415       (339 )     20,076       21,929       (243 )     21,686  
Selling and marketing expenses
    30,181       (1,014 )     29,167       30,097       (973 )     29,124  
General and administrative expenses
    24,746       (1,057 )     23,689       25,114       (1,020 )     24,094  
Operating income (loss)
    (5,280 )     6,298       1,018       2,999       7,184       10,183  
Financial expenses, net
    (5,028 )     -       (5,028 )     (2,427 )     -       (2,427 )
Income (loss) before taxes on income
    (10,308 )     6,298       (4,010 )     572       7,184       7,756  
Taxes on income (Tax benefit)
    68       -       68       (538 )     -       (538 )
Net income (loss)
    (10,376 )     6,298       (4,078 )     1,110       7,184       8,294  
                                                   
Basic net earnings (loss) per share
    (0.25 )             (0.10 )     0.03               0.20  
Diluted net earnings (loss) per share
    (0.25 )             (0.10 )     0.03               0.19  
                                                   
Weighted average number of shares used in
                                               
   computing net earnings (loss) per share
                                               
 
    Basic
    41,915               41,915       41,346               41,346  
 
    Diluted
    41,915               41,915       42,224               43,355  
                                                   
(1) Adjustments reflect the effect of non-cash stock based compensation as per ASC 718 and amortization of intangible assets related to acquisition transactions.
         
                                                   
             
Nine months ended
                   
Nine months ended
         
             
30 September 2013
                   
30 September 2012
         
             
Unaudited
                   
Unaudited
         
Non-cash stock-based compensation expenses:
                                               
Cost of revenues
            143                       230          
Research and development
            339                       243          
Selling and marketing
            325                       285          
General and administrative
            1,057                       1,020          
                1,864                       1,778          
                                                   
Amortization of intangible assets related to acquisition transactions:
                                 
Cost of revenues
            3,745                       4,718          
Selling and marketing
            689                       688          
                4,434                       5,406          
 
 
9

 
 
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,
 
   
2013
   
2012
   
2013
   
2012
 
   
Unaudited
   
Unaudited
   
Unaudited
   
Unaudited
 
                         
Revenues
    234,336       250,935       71,303       89,009  
Cost of revenues
    164,274       170,796       50,904       60,588  
Gross profit
    70,062       80,139       20,399       28,421  
Research and development expenses:
                               
Expenses incurred
    21,864       24,274       7,088       7,699  
Less - grants
    1,449       2,345       585       661  
      20,415       21,929       6,503       7,038  
Selling and marketing expenses
    30,181       30,097       9,159       9,346  
General and administrative expenses
    24,746       25,114       8,185       8,840  
Operating income (loss)
    (5,280 )     2,999       (3,448 )     3,197  
Financial expenses, net
    (5,028 )     (2,427 )     (1,579 )     (412 )
Income (loss) before taxes on income
    (10,308 )     572       (5,027 )     2,785  
Taxes on income (Tax benefit)
    68       (538 )     (983 )     (536 )
Net income (loss)
    (10,376 )     1,110       (4,044 )     3,321  
                                 
Basic net earnings (loss) per share
    (0.25 )     0.03       (0.10 )     0.08  
Diluted net earnings (loss) per share
    (0.25 )     0.03       (0.10 )     0.08  
                                 
Weighted average number of shares used in
                               
   computing net earnings (loss) per share
                               
Basic
    41,915       41,346       42,048       41,462  
Diluted
    41,915       42,224       42,048       42,302  
 
 
10

 
 
GILAT SATELLITE NETWORKS LTD.
                     
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               
US dollars in thousands
                     
 
   
Nine months ended
   
Three months ended
 
   
September 30,
   
September 30,
 
   
2013
   
2012
   
2013
   
2012
 
   
Unaudited
   
Unaudited
   
Unaudited
   
Unaudited
 
                         
Cash flows from operating activities:
                       
Net income (loss)
    (10,376 )     1,110       (4,044 )     3,321  
Adjustments required to reconcile net income (loss)
                               
to net cash generated from (used in) operating activities:
                               
Depreciation and amortization
    16,033       16,591       4,825       5,893  
Stock-based compensation
    1,864       1,778       691       702  
Accrued severance pay, net
    (1 )     238       (65 )     (73 )
Accrued interest and exchange rate differences on
                               
   short and long-term restricted cash, net
    1,382       (95 )     990       (26 )
Exchange rate differences on long-term loans
    92       9       138       133  
Capital loss from disposal of property and equipment
    36       47       23       50  
Deferred income taxes
    (871 )     (1,079 )     (826 )     (749 )
Decrease (increase) in trade receivables, net
    1,470       (10,624 )     3,695       (3,510 )
Decrease (increase) in other assets (including short-term, long-term
                               
   and deferred charges)
    678       (2,326 )     (3,436 )     3,102  
Decrease (increase) in inventories
    (8,219 )     2,447       (2,755 )     2,842  
Increase (decrease) in trade payables
    5,015       833       1,478       (4,576 )
Increase (decrease) in accrued expenses
    (4,578 )     (2,631 )     (1,923 )     3,516  
Increase (decrease) in advances from customer, held
                               
   by trustees, net
    (4,448 )     2,936       (525 )     (2,066 )
Increase (decrease) in other accounts payable and other long term liabilities
    (5,054 )     (5,744 )     629       (25 )
Net cash generated from (used in) operating activities
    (6,977 )     3,490       (1,105 )     8,534  
 
 
11

 
 
GILAT SATELLITE NETWORKS LTD.
                     
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               
US dollars in thousands
                     
 
   
Nine months ended
   
Three months ended
 
   
September 30,
   
September 30,
 
   
2013
   
2012
   
2013
   
2012
 
   
Unaudited
   
Unaudited
   
Unaudited
   
Unaudited
 
Cash flows from investing activities:
                       
Purchase of property and equipment
    (3,719 )     (3,428 )     (1,488 )     (1,262 )
Investment in restricted cash held by trustees
    (14,455 )     (28,701 )     (3,219 )     (11,081 )
Proceeds from restricted cash held by trustees
    10,283       22,516       512       13,441  
Investment in restricted cash (including long-term)
    (30,173 )     (15,417 )     (12,173 )     (6,303 )
Proceeds from restricted cash (including long-term)
    31,958       20,877       12,619       6,253  
Purchase of intangible assets
    (118 )     (82 )     -       (10 )
Net cash generated from (used in) investing activities
    (6,224 )     (4,235 )     (3,749 )     1,038  
                                 
Cash flows from financing activities:
                               
Issuance of restricted stock units and exercise of stock options
    579       18       17       6  
Payment of obligation related to the purchase of intangible assets
    (500 )     -       -       -  
Proceeds from financing contract
    14,472       -       -       -  
Short-term bank credit, net
    (92 )     1,190       366       (11 )
Proceeds from long-term loans
    -       10,000       -       -  
Repayment according to financing contract
    (1,288 )     -       (634 )     -  
Repayment of long-term loans
    (12,804 )     (5,435 )     (6,829 )     (1,012 )
Net cash generated from (used in) financing activities
    367       5,773       (7,080 )     (1,017 )
                                 
Effect of exchange rate changes on cash and cash equivalents
    (220 )     (233 )     7       (69 )
                                 
Increase (decrease) in cash and cash equivalents
    (13,054 )     4,795       (11,927 )     8,486  
                                 
Cash and cash equivalents at the beginning of the period
    66,968       56,231       65,841       52,540  
                                 
Cash and cash equivalents at the end of the period
    53,914       61,026       53,914       61,026  
 
 
12

 
 
GILAT SATELLITE NETWORKS LTD.
                 
CONDENSED EBITDA
                 
US dollars in thousands
                 
 
   
Nine months ended
    Three months ended  
   
September 30,
   
September 30,
 
   
2013
   
2012
   
2013
   
2012
 
   
Unaudited
   
Unaudited
   
Unaudited
   
Unaudited
 
                         
Operating income (loss)
    (5,280 )     2,999       (3,448 )     3,197  
Add:
                               
Non-cash stock-based compensation expenses
    1,864       1,778       691       702  
Depreciation and amortization
    16,033       16,591       4,825       5,893  
EBITDA
    12,617       21,368       2,068       9,792  
 
13