Gilat Announces Fourth Quarter 2007 Results; Revenues Reach Five-Year Record of $72.7 Million

Gilat Satellite Networks Ltd. (NasdaqGM:GILT), a worldwide leader in satellite networking technology, solutions and services, today reported its results for the quarter ending December 31, 2007.

Revenues for the fourth quarter of 2007 reached $72.7 million, up 11 percent from $65.4 million in the same period of 2006. Revenues for the twelve month period ended December 31, 2007 were $282.6 million, up 14 percent from $248.7 million in the comparable period of 2006. GAAP loss for the fourth quarter of 2007 was $6.2 million, or a loss of $0.16 per diluted share. GAAP net income for the twelve month period ended December 31, 2007 was $10.1 million or $0.24 per diluted share.

In accordance with the guidelines of FASB 144, "Accounting for the impairment or disposal of long lived assets" the Company performed an impairment review of its long lived assets. As a result of this review, the Company concluded that the carrying amount of its long lived network assets group in Colombia exceeded their fair value and recorded a non cash impairment of all these assets in an amount of $12.2 million.

Excluding the non-cash impairment, on a non-GAAP basis:

• Net income in the fourth quarter of 2007 increased by 34%, to $6.0 million or $0.14 per diluted share, from net income of $4.5 million or $0.12 per diluted share in the fourth quarter of 2006;
• Net income for the twelve month period ended December 31, 2007 increased by 113%, to $22.3 million, or $0.54 per diluted share, from a net income of $10.5 million, or $0.38 per diluted share in the year ended December 31, 2006.

For a detailed reconciliation of GAAP to non-GAAP financial information and for more information regarding Gilat's use of non-GAAP financial measures, please see the table titled “Reconciliation between GAAP and non-GAAP statements of operations” as well as the notes contained in this press release.

Gilat’s Chief Executive Officer and Chairman of the Board Amiram Levinberg said, “The quarterly and annual results show a thriving core business, with record quarterly and annual revenues. We met our management financial objectives for 2007 with double digit revenue growth of 14% and, excluding the non-cash impairment, an expansion of our operating margin to 6.2% and net income margin to 7.9%.”

“Our GNS business unit has grown by winning large projects in Africa, Eurasia and Latin America. In the U.S., Spacenet, has successfully penetrated the government market with new deals in this sector as well as in its core customer base of enterprises. In the fourth quarter, we introduced our SkyEdge II, an advanced VSAT platform based on next generation technology. The product has already begun to receive high market acceptance and enhances our technology leadership in the market. Based on this technology platform, our strong position in the international market and our successful penetration into new markets in the U.S., we are well positioned to continue our growth and meet our management financial objectives for the coming year.”

“In addition, our Board of Directors continues to evaluate a strategic transaction for the Company. We expect our board will reach resolution in the coming weeks.”

Management Financial Objectives for 2008

• Double-digit revenue growth
• Increased R&D expenses to expand the Company’s product portfolio
• Expansion of operating and net income margins

Recent Announcements

-- Gilat was chosen by Tatanet, one of India's leading satellite service providers, to deliver a broadband satellite network that will serve the Small & Medium Enterprise (SME) and industry vertical market segments in India

-- A broadband satellite network for Bharti, India's leading telecommunications operator. The order comprises more than 13,500 SkyEdge IP VSATs. The new network will be used by Bharti to offer information and communication services to meet the requirements of the local citizens of India's Gujarat State.

-- A SkyEdge satellite hub station and 1,964 VSATs for Mexico’s Grupo Elektra for use in several Latin American countries including Mexico, Guatemala, Honduras, Peru, El Salvador, Panama and Argentina. Mexico’s Grupo Elektra is one of Latin America’s leading specialty retailers and financial service companies.

-- Gilat completed the first phase of a turnkey satellite network solution for Vivo, a customer of Telecomunicações de Sao Paulo (Telesp). Telesp is the largest subsidiary of Brazil’s Telefonica Group and Vivo is Latin America’s largest mobile network operator. Vivo recently deployed a major GSM network and Telesp is using Gilat’s SkyAbis technology to provide cost-effective backhaul and trunking (DCME) to remote Vivo sites in Brazil.

-- Optus, an Australian leader in integrated communications is expanding its network with two additional SkyEdge satellite hub stations and thousands of VSATs. SkyEdge VSAT technology will provide cost-effective connectivity to regions in Australia which otherwise would not be able to benefit from broadband Internet services.

Gilat will host a conference call today with an accompanying slide presentation at 9:30 AM EST. In order to ensure audio access, participants from the U.S. should dial in at (888) 281-1167 and international participants should dial in at (972) 3-918-0692. The presentation may be accessed through the Company’s website at www.gilat.com prior to the call. The call will also be available as a Webcast on the Company’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 for the fourth quarter of 2007 are unaudited. To supplement the consolidated financial statements presented in accordance with GAAP, the Company presents Gilat’s net income, EBITDA and earnings per diluted share, before the impact of a non-cash impairment of long lived assets and before share-based payment charge, which is the non-cash stock option expense as per SFAS 123 (R). 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 exceptional items such as the impact of a non-cash impairment of long lived assets, ('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 Satellite Networks Ltd. (NasdaqGM:GILT) is a leading provider of products and services for satellite-based communications networks. The Company operates under three business units: (i) Gilat Network Systems ("GNS"), which is a provider of network systems and associated professional services to service providers and operators worldwide; (ii) Spacenet Inc., which provides managed services in North America for businesses and governments through its Connexstar service brand and for consumers through its StarBand service brand; (iii) Spacenet Rural Communications, which offers rural telephony and Internet access solutions to remote areas primarily in Latin America.

Gilat was founded in 1987 and has shipped over 670,000 Very Small Aperture Terminals (VSATs) to more than 85 countries across six continents. Gilat’s headquarters is located in Petah Tikva, Israel. The Company has 16 sales and service offices worldwide. Gilat markets the SkyEdge ™ Product Family which includes the SkyEdge™ Pro, SkyEdge™ IP, SkyEdge™ Call, SkyEdge™ DVB-RCS and SkyEdge™ Gateway. In addition, the Company markets numerous other legacy products.

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.

Contacts:

Gilat Satellite Networks Ltd.
Ayelet Shaked, +972 2 925 2598
Director of IR
ayelets@gilat.com
or
The Global Consulting Group
Andrea Costa or Erik Knettel, 1-646-284-9400
gilat@hfgcg.com