Gilat Satellite (NASDAQ:GILTF)
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Gilat Satellite Networks Ltd. (Nasdaq:GILTF), a
worldwide leader in satellite networking technology, solutions and
services today reported its results for the fourth quarter and full
year ending December 31, 2005.
Revenues for the fourth quarter of 2005 were $56.0 million (up
from $49 million in the third quarter 2005), EBITDA (3) was $6.6
million (up from $4.0 million in the third quarter 2005) and net
income was $1.0 million or $0.04 diluted per share (up from a net loss
of $1.7 million or $0.08 diluted per share in the third quarter 2005).
By comparison, revenues for the fourth quarter of 2004 were $61.8
million, EBITDA was $9.7 million and the net loss was $1.7 million or
$0.08 diluted per share.
Revenues for the year ended December 31, 2005 were $209.4 million,
EBITDA was $20.5 million and net loss was $3.7 million or $0.17
diluted per share. By comparison, revenues for the year ended December
31, 2004 were $241.5 million, EBITDA was $25.0 million and net loss
was $11.5 million or $0.52 diluted per share. These results reflect
the implementation of a Company policy to focus on projects with
higher profitability.
The Company also announced that its backlog increased to
approximately $206 million as of December 31, 2005, from $192 million
as of December 31, 2004.
Gilat's Chief Executive Officer and Chairman of the Board Amiram
Levinberg said, "We are pleased with our improved results in the last
quarter of 2005 and with our positioning for 2006. Our backlog has
increased and this is our second consecutive quarter in which we have
seen an increased worldwide demand for our SkyEdge platform. In the
fourth quarter of 2005, we shipped approximately 40% more VSATs than
in the previous quarter."
As previously announced, in December 2005, the Company revised the
terms of its loan and warrant with York Capital Management. The
increase in the value of the warrant in the amount of $3.8 million was
recorded as a discount on the loan and an increase to equity. The
discount will be amortized to financial expenses over the term of the
loan.
During 2005, the Company reduced its debt by $13.4 million
(including the discount mentioned above), from $133.2 million as of
December 31, 2004 to $119.8 million as of December 31, 2005.
Recently Announced Deals
-- Gilat announced that China Unicom Limited (NYSE: CHU)
purchased a 1,500-site Gilat SkyEdge VSAT network. China
Unicom, with 2004 revenues of more than US$9.5 billion, is one
of the world's largest telecommunications operators. The VSAT
equipment will be used for rural telecom applications
throughout China. Gilat has already deployed nearly 600 sites
in the three months since this contract was signed.
-- Gilat also signed a contract to provide a SkyEdge network to
Federal State Unitary Enterprise Russian Post. Russian Post is
one of Russia's largest companies, operating more than 40,000
post offices and providing many other telecom, shipping,
retail and financial services for annual revenue of US$1.5
billion. Gilat will deploy a SkyEdge VSAT hub station in the
Siberian capital city of Novosibirsk. The network will provide
broadband Internet access, always-on data communications for
postal applications and telephony services to remote postal
facilities throughout Siberia and far-eastern Russia. The
initial order is for several hundred sites.
-- Gilat announced that it has expanded its market leadership in
Kazakhstan by signing contracts to deploy broadband satellite
networks for four of that country's leading telecom operators
-- Technoservice Lyuks, Jarykh, Astel and Kazakhtelecom.
Gilat's SkyEdge VSAT networks will bring dependable,
high-speed data networking to government agencies, banks and
energy companies. With the addition of these new networks,
nearly 3,500 Gilat VSATs are deployed throughout Kazakhstan.
The majority of all telecom operators in Kazakhstan now deploy
Gilat satellite equipment.
-- Gilat also announced the implementation of an agreement with
its long time customer Embratel and its satellite subsidiary
StarOne, to deploy a 2,400 site satellite-based VSAT network
for the largest cosmetics chain in Brazil, O Boticario
Comercial Farmaceutica Ltda.(O Boticario). The remote sites
are being deployed throughout O Boticario stores, including
various locations in airports, supermarkets and shopping
centers throughout Brazil. One thousand sites have already
been implemented, with the remaining to be installed in the
first half of 2006.
-- Spacenet Inc. was chosen by Scientific Games to provide 3,000
Skystar Advantage VSAT terminals for state lottery networks in
Colorado, Pennsylvania, North Dakota and South Dakota.
Spacenet also provided SGI with a dedicated hub, which will be
used to support the expansion of its VSAT network.
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 three business units: (i) Gilat Network
Systems ("GNS"), which is a provider of network systems and associated
professional services to service providers and operators; (ii)
Spacenet Inc, in North America, which provides managed services 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 600,000 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 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
Notes:
1) 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.
2) The attached summary financial statements were prepared in
accordance with U.S. GAAP. The attached summary financial statements
for the year ended December 31 2005 and Q4 2005 are unaudited.
3) Operating income (loss) before depreciation, amortization and
exceptional items, ('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 (loss) or net income
(loss) 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 (loss) and EBIDTA is presented
in the attached summary financial statements.
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GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
US dollars in thousands
December 31, December 31,
------------ ------------
2005 2004
------------ ------------
Unaudited Unaudited
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 74,929 75,771
Short-term bank deposits 3,301 -
Short-term restricted cash 15,844 14,168
Restricted cash held by trustees 6,638 10,620
Trade receivables (net of allowance for
doubtful accounts) 33,683 31,380
Inventories 23,253 23,277
Other current assets 27,215 27,059
------------ ------------
Total current assets 184,863 182,275
-------------------- ------------ ------------
LONG-TERM INVESTMENTS AND RECEIVABLES:
Long-term restricted cash 6,699 7,534
Long-term restricted cash held by trustees 13,692 18,994
Severance pay fund 8,467 7,933
Long-term trade receivables, receivables in
respect of capital leases
and other receivables, net 22,757 27,728
------------ ------------
51,615 62,189
------------ ------------
PROPERTY AND EQUIPMENT, NET 124,245 137,198
------------ ------------
INTANGIBLE ASSETS AND DEFERRED CHARGES,
NET 12,254 9,432
------------ ------------
TOTAL ASSETS 372,977 391,094
------------ ============ ============
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GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
US dollars in thousands
December 31, December 31,
------------ ------------
2005 2004
------------ ------------
Unaudited Unaudited
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit 8,172 4,159
Current maturities of long-term loans 7,712 8,869
Trade payables 24,180 21,245
Accrued expenses 22,418 26,228
Short-term advances from customer held by
trustees 15,502 13,500
Other accounts payable 36,672 40,048
------------ ------------
Total current liabilities 114,656 114,049
-------------------------- ------------ ------------
LONG-TERM LIABILITIES:
Accrued severance pay 8,396 8,172
Long-term advances from customer held by
trustees 27,835 40,226
Long-term loans, net of current maturities 95,745 108,182
Accrued interest related to restructured
debt 3,850 4,820
Other long-term liabilities 20,657 15,951
Excess of losses over investment in
affiliates 7 2,102
Convertible subordinated notes 16,333 16,171
------------ ------------
Total long-term liabilities 172,823 195,624
--------------------------- ------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Share capital - Ordinary shares of NIS 0.2
par value 995 984
Additional paid in capital 738,724 733,582
Accumulated other comprehensive loss 16 (2,624)
Accumulated deficit (654,237) (650,521)
------------ ------------
Total shareholders' equity 85,498 81,421
-------------------------- ------------ ------------
Total liabilities and shareholders' equity 372,977 391,094
------------------------------------------ ============ ============
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GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except per share data)
Year ended Three months ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Unaudited Unaudited Unaudited Unaudited
--------- --------- --------- ---------
Revenues 209,395 241,498 55,958 61,801
Cost of Revenues 133,219 164,395 34,665 38,071
--------- --------- --------- ---------
Gross profit 76,176 77,103 21,293 23,730
--------- --------- --------- ---------
Research and development
expenses:
Expenses incurred 16,944 19,134 3,905 5,086
Less - grants 2,950 5,255 364 810
--------- --------- --------- ---------
13,994 13,879 3,541 4,276
--------- --------- --------- ---------
Selling, general and
administrative expenses 60,794 69,891 15,601 17,876
Impairment of tangible and
intangible assets - 2,161 - -
Gain from derecognition of
Liability - (245) - -
--------- --------- --------- ---------
Operating income (loss) 1,388 (8,583) 2,151 1,578
--------- --------- --------- ---------
Financial expenses (2,677) (266) (821) (1,755)
Other income (expenses) 299 (274) 159 (82)
--------- --------- --------- ---------
Income (loss) before taxes on
income (990) (9,123) 1,489 (259)
--------- --------- --------- ---------
Taxes on income 3,126 4,429 473 1,733
--------- --------- --------- ---------
Income (loss) after taxes on
income (4,116) (13,552) 1,016 (1,992)
--------- --------- --------- ---------
Equity in profits of
affiliated companies 400 1,242 - 305
Minority interest in losses
of a subsidiary - 164 - -
--------- --------- --------- ---------
Net income (loss) from
continuing operations (3,716) (12,146) 1,016 (1,687)
--------- --------- --------- ---------
Gain from cumulative effect
of a change
in an accounting principle - 611 - -
--------- --------- --------- ---------
Net income (loss) (3,716) (11,535) 1,016 (1,687)
========= ========= ========= =========
Basic net earnings (loss) per
share (0.17) (0.52) 0.05 (0.08)
========= ========= ========= =========
Diluted net earnings (loss)
per share (0.17) (0.52) 0.04 (0.08)
========= ========= ========= =========
Shares used in basic net
earnings (loss) per share
computation 22,440 22,242 22,555 22,286
========= ========= ========= =========
Shares used in diluted net
earnings (loss) per share
computation 22,440 22,242 22,778 22,286
========= ========= ========= =========
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GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
Year ended Three months ended
December 31, December 31,
-------- -------- -------- ---------
2005 2004 2005 2004
-------- -------- -------- ---------
Unaudited Unaudited Unaudited Unaudited
--------- --------- --------- ---------
Cash flows from operating
activities:
-------------------------
Net income (loss) (3,716) (11,535) 1,016 (1,687)
Adjustments required to
reconcile net income (loss)
to net cash provided by
operating activities:
Depreciation and amortization 19,116 31,674 4,464 8,137
Non cash cumulative effect
relating to a subsidiary - (198) - -
Loss from Disposal of a
subsidiary 171 - - -
Loss (gain) from disposal of
a subsidiary (397) 192 (200) -
Deferred Stock compensation
relating to options 137 207 (201) 30
Deferred Stock compensation
relating to options in a
subsidiary - (764) - -
Impairment of property and
equipment and other intangible
assets - 2,161 - -
Equity in profits of
affiliated companies (400) (1,242) - (305)
Accrued severance pay, net (309) 431 (99) (87)
Interest accrued on short and
long-term restricted cash (490) (1,943) (106) (494)
Exchange differences on long-
term loans (973) 449 (127) 592
Exchange differences on loans
to employees 213 - (11) -
Minority interest in losses
of a subsidiary - (164) - -
Capital loss from disposal of
property and equipment 315 - 15 -
Deferred income taxes, net (473) 1,869 (224) 575
Decrease (increase) in trade
receivables (2,440) 7,970 (2,424) 8,539
Decrease in Receivables in respect of
capital leases, prepaid
expenses and other accounts
receivable (including long-
term) 6,711 12,449 2,519 5,683
Increase in inventories (5,188) (6,848) (5,602) (5,197)
Increase (decrease) in trade
payables 2,941 (5,330) 5,099 2,845
Increase (decrease) in
accrued expenses (4,652) (11,637) 1,794 613
Increase (decrease) in other
accounts payable (including
long-term) 3,509 (1,427) 6,589 (3,712)
Increase (decrease) in advances
from customers held
in trustees, net (including
long-term) (10,388) 14,207 (2,556) (3,152)
-------- -------- -------- ---------
Net cash provided by
operating activities 3,687 30,521 9,946 12,380
-------- -------- -------- ---------
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GILAT SATELLITE NETWORKS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
US dollars in thousands
Year ended Three months ended
December 31, December 31,
-------- -------- -------- ---------
2005 2004 2005 2004
-------- -------- -------- ---------
Unaudited Unaudited Unaudited Unaudited
--------- --------- --------- ---------
Cash flows from investing
activities:
-------------------------
Purchase of property and
equipment (3,605) (6,163) (679) (1,678)
Return of investment 388 - - -
Purchase of minority shares - (1,053) - -
Disposal of subsidiary (181) 600 - -
Consolidation of StarBand - 2,592 - -
Investment in short-term bank
deposits (3,301) (442) (3,301) -
Proceeds from short-term bank
deposits - 442 - -
Proceeds from disposal of
fixed assets 34 - 26 -
Loans to employees - Net (3,606) - 75 -
Investment in restricted cash
held by trustee (3,305) (23,501) (1,060) -
Proceeds from restricted cash
held by trustee 13,078 22,486 5,157 3,692
Investment in restricted cash
(including long-term) (13,759) (11,187) (1,120) (1,985)
Investment in other assets (40) (78) 53 (33)
Proceeds from restricted cash
(including long-term) 13,007 9,840 5,583 1,644
-------- -------- -------- ---------
Net cash provided by (used in)
investing activities (1,290) (6,464) 4,734 1,640
-------- -------- -------- ---------
Cash flows from financing
activities:
-------------------------
Exercise of options, net 1,218 432 8 414
Short-term bank credit, net 4,013 2,389 (3,264) 1,251
Repayment of long-term loans (8,823) (2,924) (1,007) (610)
-------- -------- -------- ---------
Net cash provided by (used in)
financing activities (3,592) (103) (4,263) 1,055
-------- -------- -------- ---------
Effect of exchange rate changes
on cash and cash equivalents 353 36 (166) 29
-------- -------- -------- ---------
Increase (decrease) in cash
and cash equivalents (842) 23,990 10,251 15,104
Cash and cash equivalents at
the beginning of the year 75,771 51,781 64,678 60,667
-------- -------- -------- ---------
Cash and cash equivalents at
the end of the year 74,929 75,771 74,929 75,771
======== ======== ======== =========
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GILAT SATELLITE NETWORKS LTD.
CONDENSED EBITDA
US dollars in thousands
Year ended Three months ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Unaudited Unaudited Unaudited Unaudited
--------- --------- --------- ---------
Operating income (loss) 1,388 (8,583) 2,151 1,578
Less:
Impairment of tangible and
intangible assets - 2,161 - -
Gain from derecognition of
liability - (245) - -
Deprecation and amortization 19,116 31,674 4,464 8,137
--------- --------- --------- ---------
EBITDA 20,504 25,007 6,615 9,715
========= ========= ========= =========
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GILAT SATELLITE NETWORKS LTD.
DISCLOSURE OF NON-US GAAP NET EARNINGS (LOSS) FOR COMPARATIVE PURPOSES
AND EARNINGS (LOSS) PER SHARE EXCLUDING STOCK COMPENSATION RELATED TO
OPTIONS
U.S. dollars in thousands
Year ended Three months ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Unaudited Unaudited Unaudited Unaudited
--------- --------- --------- ---------
US GAAP net earnings (loss) (3,716) (11,535) 1,016 (1,687)
--------- --------- --------- ---------
Stock compensation relating to
options 137 (557) (201) 30
--------- --------- --------- ---------
Non-US GAAP net earnings
(loss) (3,579) (12,092) 815 (1,657)
========= ========= ========= =========
Basic non US GAAP net earnings
(loss) per share (0.16) (0.54) 0.04 (0.07)
========= ========= ========= =========
Diluted non US GAAP net
earnings (loss) per share (0.16) (0.54) 0.04 (0.07)
========= ========= ========= =========
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