Edgar Filing: GILAT SATELLITE NETWORKS LTD

zk1517206.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 August, 2015

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 August 12, 2015, announcing Gilat’s Second Quarter 2015 results.

We consent to the incorporation by reference of the GAAP financial information included herein, in the Registration Statements on Form F-3 (Registration No. 333-195680) and the Registration Statements on Form S-8 (Registration Nos. 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 August 12, 2015	By:	/s/ Ran Tal
		Ran Tal
		VP General Counsel

Gilat Announces Second Quarter 2015 Results

Gilat reiterates Revenue management objectives and modifies down EBITDA

management objectives for 2015

Petah Tikva, Israel – August 12, 2015 – Gilat Satellite Networks Ltd. (NASDAQ, TASE: GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the second quarter ended June 30, 2015.

Key Financial Updates:

Revenues for the second quarter of 2015 were $44.3 million compared to $45.2 million in the first quarter of 2015 and $54.1 million in the comparable period of 2014.

EBITDA for the second quarter of 2015 was a loss of $2.5 million compared to an income of $0.2 million in the first quarter of 2015 and an income of $3.9 million in the comparable period of 2014.

Cash balances, including restricted cash, net of short-term bank credits, increased by $42.4 million compared to December 31, 2014, resulting in a cash balance of $95.9 million as of June 30, 2015.

Modified management objectives for 2015: reiterated revenues objective to between $250 to $260 million and modified EBITDA objective to between $20 to $21 million.

Revenues for the second quarter of 2015 were $44.3 million, compared to $54.1 million for the same period in 2014.

On a non-GAAP basis, operating loss was $5.2 million in the second quarter of 2015 as compared to an operating income of $1.5 million in the comparable quarter of 2014.

On a GAAP basis, operating loss was $7.2 million in the second quarter of 2015 as compared to an operating loss of $0.5 million in the comparable quarter of 2014.

On a non-GAAP basis, net loss for the quarter was $7.1 million or $0.16 per diluted share compared to net income of $0.6 million or $0.01 per diluted share in the same quarter of 2014.

On a GAAP basis, net loss for the quarter was $9.1 million or a loss of $0.21 per diluted share compared to a net loss of $1.4 million or a loss of $0.03 per diluted share in the same quarter of 2014.

EBITDA for the second quarter of 2015 was a loss of $2.5 million compared with an income of $3.9 million in the comparable period in 2014.

“The second quarter and the remainder of 2015 are negatively impacted by two main factors. The first is the weaker than expected performance of our Defense sector, mainly resulting from delayed orders from the US DOD and other clients, coupled with lower than expected margins. The second factor is the lower than expected performance of the Colombia Kioscos project, coupled with the sharp devaluation of the Colombian Peso.

“However, we see a stronger second half which will accelerate in Q4 due to growth in all sectors, mainly in our projects in Peru,” said Dov Baharav, Interim CEO and Chairman of the Board of Gilat.

“I am very proud to announce a key development in our HTS business. Gilat is partnering with leading China Satellite Communication Companies to provide multiple network segments and VSAT terminals for the first Ka HTS multi-spot beam satellite ChinaSat 16. This agreement presents a major opportunity to develop a long term substantial relationship with our new partners in China to drive further potential business,” Mr. Baharav highlighted.

“With the reassurance of our growth drivers’ strength, namely HTS, Cellular Backhaul, airborne mobility and the exceptionally large funnel of deals we have, we are optimistic about the business outlook for 2016 and beyond for Gilat,” concluded Mr. Baharav

Key Recent Announcements:

Bolivian Space Agency Selects Gilat for its National VSAT Platform Enabling Comprehensive Connectivity Capabilities

Fixed VSAT operators can now take advantage of Inmarsat’s wholesale service, powered by Gilat Satellite Networks and Global Xpress

Gilat Presents Compelling Business Case for MNOs to Deploy Satellite Backhaul for their LTE Networks

Gilat Delivers Mission-Critical UAV Connectivity and Maximizes Payload with Comprehensive BLoS SATCOM Solutions

Conference Call and Webcast Details:

Gilat management will host a conference call today at 13:30 GMT / 09:30 EDT / 16:30 IDT to discuss the results. International participants are invited to access the call at (972)3-918-0664, and US-based participants are invited to access the call by dialing (1)888-281-1167. A replay of the conference call will be available beginning at approximately 16:00 GMT/ 12:00 EDT/ 19:00 IDT today, until 16:00 GMT/ 12:00 EDT/ 19:00 IDT August 15, 2015. International participants are invited to access the call at (972)3-925-5921, and US-based participants are invited to access the call by dialing (1)877-456-0009. 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, operating 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

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 Peru and Colombia.

With over 25 years of experience, and over a million products shipped to more than 90 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. Gilat’s controlling shareholders are the FIMI Private Equity Funds. 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:

Gilat Satellite Networks

Joelle Inowlocki

JoelleI@gilat.com

KCSA Strategic Communications

Phil Carlson, Vice President

(212) 896-1233

pcarlson@kcsa.com

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

	June 30,		December 31,
	2015		2014
	Unaudited

ASSETS

CURRENT ASSETS:
Cash and cash equivalents		25,596		27,726
Restricted cash		73,156		25,983
Restricted cash held by trustees		6,162		15,441
Trade receivables, net		50,558		57,728
Inventories		26,922		25,112
Other current assets		16,390		14,760
Total current assets		198,784		166,750

LONG-TERM INVESTMENTS AND RECEIVABLES:
Long-term restricted cash		201		216
Severance pay funds		8,372		8,085
Other long term receivables and deferred charges		9,483		12,124
Total long-term investments and receivables		18,056		20,425

PROPERTY AND EQUIPMENT, NET		88,263		90,893

INTANGIBLE ASSETS, NET		20,040		22,970

GOODWILL		63,870		63,870

TOTAL ASSETS		389,013		364,908

GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
US dollars in thousands
	June 30,			December 31,
	2015			2014
	Unaudited

LIABILITIES AND EQUITY

CURRENT LIABILITIES:
Short-term bank credit and loans		9,220			15,857
Current maturities of long-term loans		4,552			4,595
Trade payables		17,310			22,850
Accrued expenses		20,092			22,475
Advances from customers		60,268			2,940
Short-term advances from customers, held by trustees		8,132			12,858
Other current liabilities		19,532			18,587

Total current liabilities		139,106			100,162

LONG-TERM LIABILITIES:
Accrued severance pay		8,175			8,157
Long-term loans, net of current maturities		21,816			26,271
Other long-term liabilities		4,880			5,179

Total long-term liabilities		34,871			39,607

COMMITMENTS AND CONTINGENCIES

EQUITY:
Share capital - ordinary shares of NIS 0.2 par value		2,019			1,966
Additional paid-in capital		881,439			876,624
Accumulated other comprehensive loss		(1,703	)		(1,420	)
Accumulated deficit		(666,719	)		(652,031	)

Total equity		215,036			225,139

TOTAL LIABILITIES AND EQUITY		389,013			364,908

GILAT SATELLITE NETWORKS LTD.

RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS

FOR COMPARATIVE PURPOSES

U.S. dollars in thousands (except share and per share data)

	Three months ended									Three months ended
	30 June 2015									30 June 2014
	GAAP			Adjustments (1)			Non-GAAP			GAAP			Adjustments (1)			Non-GAAP
	Unaudited			Unaudited			Unaudited			Unaudited			Unaudited			Unaudited

Revenues		44,324			-			44,324			54,050			-			54,050
Cost of revenues		33,274			(1,230	)		32,044			34,730			(1,248	)		33,482
Gross profit		11,050			1,230			12,280			19,320			1,248			20,568
		25	%					28	%		36	%					38	%
Research and development expenses:
Expenses incurred		6,594			(109	)		6,485			6,878			(119	)		6,759
Less - grants		222			-			222			594			-			594
		6,372			(109	)		6,263			6,284			(119	)		6,165
Selling and marketing expenses		6,412			(346	)		6,066			8,677			(350	)		8,327
General and administrative expenses		5,471			(339	)		5,132			4,841			(290	)		4,551
Operating income (loss)		(7,205	)		2,024			(5,181	)		(482	)		2,007			1,525
Financial expenses, net		(1,559	)		-			(1,559	)		(515	)		-			(515	)
Income (loss) before taxes on income		(8,764	)		2,024			(6,740	)		(997	)		2,007			1,010
Taxes on income		318			-			318			434			-			434
Net income (loss) from continuing operations		(9,082	)		2,024			(7,058	)		(1,431	)		2,007			576
Net income (loss) from discontinued operations		-			-			-			8			(8	)		-
Net income (loss)		(9,082	)		2,024			(7,058	)		(1,423	)		1,999			576

Basic net income (loss) per share from continuing operations		(0.21	)								(0.03	)
Basic net income (loss) per share from discontinued operations		-									(0.00	)
Basic net income (loss) per share		(0.21	)					(0.16	)		(0.03	)					0.01

Diluted net income (loss) per share from continuing operations		(0.21	)								(0.03	)
Diluted net income (loss) per share from discontinued operations		-									(0.00	)
Diluted net income (loss) per share		(0.21	)					(0.16	)		(0.03	)					0.01

Weighted average number of shares used in
computing net income (loss) per share
Basic		42,883,469						42,883,469			42,357,784						42,357,784
Diluted		42,883,469						42,883,469			42,357,784						43,579,048

(1)	Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related toShares acquisition transactions, and net income (loss) from discontinued operations.


	Three months ended		Three months ended
	30 June 2015		30 June 2014
	Unaudited		Unaudited
Non-cash stock-based compensation expenses:
Cost of revenues		54		60
Research and development		109		119
Selling and marketing		133		138
General and administrative		339		290
		635		607

Amortization of intangible assets related to acquisition transactions:
Cost of revenues		1,176		1,188
Selling and marketing		213		212
		1,389		1,400

GILAT SATELLITE NETWORKS LTD.

RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF OPERATIONS

FOR COMPARATIVE PURPOSES

U.S. dollars in thousands (except share and per share data)

	Six months ended									Six months ended
	30 June 2015									30 June 2014
	GAAP			Adjustments (1)			Non-GAAP			GAAP			Adjustments (1)			Non-GAAP
	Unaudited			Unaudited			Unaudited			Unaudited			Unaudited			Unaudited

Revenues		89,514			-			89,514			104,901			-			104,901
Cost of revenues		65,272			(2,481	)		62,791			65,606			(2,515	)		63,091
Gross profit		24,242			2,481			26,723			39,295			2,515			41,810
		27	%					30	%		37	%					40	%
Research and development expenses:
Expenses incurred		13,128			(219	)		12,909			14,117			(241	)		13,876
Less - grants		412			-			412			948			-			948
		12,716			(219	)		12,497			13,169			(241	)		12,928
Selling and marketing expenses		12,675			(683	)		11,992			18,367			(692	)		17,675
General and administrative expenses		10,062			(580	)		9,482			9,753			(593	)		9,160
Operating income (loss)		(11,211	)		3,963			(7,248	)		(1,994	)		4,041			2,047
Financial expenses, net		(2,910	)		-			(2,910	)		(1,549	)		-			(1,549	)
Income (loss) before taxes on income		(14,121	)		3,963			(10,158	)		(3,543	)		4,041			498
Taxes on income		567			-			567			524			-			524
Loss from continuing operations		(14,688	)		3,963			(10,725	)		(4,067	)		4,041			(26	)
Loss from discontinued operations		-			-			-			(43	)		43			-
Loss		(14,688	)		3,963			(10,725	)		(4,110	)		4,084			(26	)

Basic loss per share from continuing operations		(0.34	)								(0.10	)
Basic loss per share from discontinued operations		-									(0.00	)
Basic loss per share		(0.34	)					(0.25	)		(0.10	)					(0.00	)

Diluted loss per share from continuing operations		(0.34	)								(0.10	)
Diluted loss per share from discontinued operations		-									(0.00	)
Diluted loss per share		(0.34	)					(0.25	)		(0.10	)					(0.00	)

Weighted average number of shares used in
computing loss per share
Basic		43,139,303						43,139,303			42,266,861						42,266,861
Diluted		43,139,303						43,139,303			42,266,861						42,266,861

(1)	Adjustments reflect the effect of non-cash stock based compensation as per ASC 718, amortization of intangible assets related toShares acquisition transactions, and net income (loss) from discontinued operations.


	Six months ended		Six months ended
	30 June 2015		30 June 2014
	Unaudited		Unaudited
Non-cash stock-based compensation expenses:
Cost of revenues		106		118
Research and development		219		241
Selling and marketing		258		268
General and administrative		580		593
		1,163		1,220

Amortization of intangible assets related to acquisition transactions:
Cost of revenues		2,375		2,397
Selling and marketing		425		424
		2,800		2,821

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

	Six months ended						Three months ended
	June 30,						June 30,
	2015			2014			2015			2014
	Unaudited			Unaudited			Unaudited			Unaudited

Revenues		89,514			104,901			44,324			54,050
Cost of revenues		65,272			65,606			33,274			34,730
Gross profit		24,242			39,295			11,050			19,320

Research and development expenses:
Expenses incurred		13,128			14,117			6,594			6,878
Less - grants		412			948			222			594
		12,716			13,169			6,372			6,284
Selling and marketing expenses		12,675			18,367			6,412			8,677
General and administrative expenses		10,062			9,753			5,471			4,841
Operating loss		(11,211	)		(1,994	)		(7,205	)		(482	)
Financial expenses, net		(2,910	)		(1,549	)		(1,559	)		(515	)
Loss before taxes on income		(14,121	)		(3,543	)		(8,764	)		(997	)
Taxes on income		567			524			318			434
Loss from continuing operations		(14,688	)		(4,067	)		(9,082	)		(1,431	)
Net income (loss) from discontinued operations		-			(43	)		-			8
Loss		(14,688	)		(4,110	)		(9,082	)		(1,423	)

Loss per share from continuing operations (basic and diluted)		(0.34	)		(0.10	)		(0.21	)		(0.03	)
Net income (loss) per share from discontinued operations (basic and diluted)		-			(0.00	)		-			(0.00	)
Loss per share (basic and diluted)		(0.34	)		(0.10	)		(0.21	)		(0.03	)

Weighted average number of shares used in
computing net loss per share
Basic		43,139,303			42,266,861			42,883,469			42,357,784
Diluted		43,139,303			42,266,861			42,883,469			42,357,784

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

	Six months ended						Three months ended
	June 30,						June 30,
	2015			2014			2015			2014
	Unaudited			Unaudited			Unaudited			Unaudited
Cash flows from continuing operations
Cash flows from operating activities:
Loss		(14,688	)		(4,110	)		(9,082	)		(1,423	)
Net income (loss) from discontinued operations		-			(43	)		-			8
Loss from continuing operations		(14,688	)		(4,067	)		(9,082	)		(1,431	)
Adjustments required to reconcile net loss
to net cash generated provided by (used in) operating activities:
Depreciation and amortization		7,699			7,428			4,041			3,744
Stock-based compensation		1,163			1,220			635			607
Accrued severance pay, net		(270	)		(103	)		(169	)		19
Accrued interest and exchange rate differences on
short and long-term restricted cash, net		87			(32	)		44			(118	)
Exchange rate differences on long-term loans		(226	)		(34	)		103			(40	)
Capital loss from disposal of property and equipment		48			60			48			43
Deferred income taxes		(38	)		(47	)		3			(11	)
Decrease (increase) in trade receivables, net		6,335			(8,034	)		5,614			(5,994	)
Decrease (increase) in other assets (including short-term, long-term
and deferred charges)		16			(12,535	)		(2,918	)		(4,752	)
Decrease (increase) in inventories		(2,817	)		699			1,365			29
Increase in restricted cash directly related to operating activities		(54,318	)		-			(54,318	)		-
Increase (decrease) in trade payables		(5,301	)		(52	)		(5,106	)		1,998
Increase (decrease) in accrued expenses		(1,760	)		4,176			413			2,501
Increase (decrease) in advance from customers		57,332			(4,921	)		58,099			(3,726	)
Increase (decrease) in advances from customers, held
by trustees		(4,158	)		3,451			1,020			(777	)
Increase (decrease) in other current liabilities and other long term liabilities		1,742			(921	)		(3,275	)		127
Net cash used in operating activities		(9,154	)		(13,712	)		(3,483	)		(7,781	)

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

	Six months ended						Three months ended
	June 30,						June 30,
	2015			2014			2015			2014
	Unaudited			Unaudited			Unaudited			Unaudited
Cash flows from investing activities:
Purchase of property and equipment		(1,839	)		(10,319	)		(1,098	)		(9,794	)
Investment in restricted cash held by trustees		(6,109	)		(4,228	)		(6,109	)		-
Proceeds from restricted cash held by trustees		14,652			6,588			3,730			3,638
Investment in restricted cash (including long-term)		(21,202	)		(7,516	)		(11,150	)		(7,516	)
Proceeds from restricted cash (including long-term)		28,276			176			6,159			100

Net cash provided by (used in) investing activities		13,778			(15,299	)		(8,468	)		(13,572	)

Cash flows from financing activities:
Capital lease payments		(204	)		-			(102	)		-
Issuance of restricted stock units and exercise of stock options		3,705			746			2,912			453
Short term bank credit, net		(5,569	)		7,216			4,438			5,564
Repayment of long-term loans		(4,272	)		(4,330	)		(137	)		(165	)

Net cash provided by (used in) financing activities		(6,340	)		3,632			7,111			5,852

Effect of exchange rate changes on cash and cash equivalents		(414	)		355			71			322

Decrease in cash and cash equivalents		(2,130	)		(25,024	)		(4,769	)		(15,179	)

Cash and cash equivalents at the beginning of the period		27,726			58,424			30,365			48,579

Cash and cash equivalents at the end of the period		25,596			33,400			25,596			33,400

GILAT SATELLITE NETWORKS LTD.
CONDENSED EBITDA
US dollars in thousands

	Six months ended						Three months ended
	June 30,						June 30,
	2015			2014			2015			2014
	Unaudited			Unaudited			Unaudited			Unaudited

Operating loss		(11,211	)		(1,994	)		(7,205	)		(482	)
Add:
Non-cash stock-based compensation expenses		1,163			1,220			635			607
Depreciation and amortization		7,699			7,428			4,041			3,744
EBITDA		(2,349	)		6,654			(2,529	)		3,869