Wednesday November 12, 8:29 am Eastern Time
Company Press Release
Gilat Reports Record Sales, Record Earnings and Record Orders for the Third Quarter of 1997
PETAH TIKVA, Israel--(BUSINESS WIRE)--Nov. 12, 1997--Gilat Satellite Networks Ltd. (NASDAQ: GILTF - news) announced today revenues of US$27.3 million for the third quarter ended September 30, 1997, an increase of nearly 40% over the same period in 1996, when the Company had sales of US$19.6 million. Net income was US$4.4 million ($0.39 per share), compared with US$3.7 million ($0.34 per share) posted for the same period last year.
Revenues for the nine months ended September 30, 1997, were US$73.7 million, an increase of nearly 40% over the same period last year, when Gilat had sales of US$52.9 million. Net income was $11.2 million ($1.00 per share), compared with the US$9.7 million ($0.88 per share) result for the first nine months of 1996.
Largest-ever satellite telephony deal in Ethiopia
The Ethiopian Telecommunications Corporation (ETC) recently signed an agreement to purchase a combination of 470 FaraWay(TM) and DialAway(TM) VSATs, to be installed throughout Ethiopia as the foundation for its satellite- based telephony infrastructure. The deal is worth approximately US$15 million to Gilat, with delivery scheduled for 1997 and 1998. Under the contract, once the VSAT networks are in place, Gilat's LearnAway(TM) distance learning application is due to be implemented to help promote quality education in the region. The purchase orders, which were received as a result of the agreement, are subject to the receipt of letters of credit.
Mesfin Haile, General Manager of Addis Ababa-based ETC, commented, ''Two years ago we began talking to VSAT companies about helping us improve Ethiopia's communications infrastructure. Out of the nine major vendors which answered our Request For Proposal, we chose Gilat. They simply offered us the best technology at the best price. Looking forward, we see Gilat as a true partner in helping us achieve our telecommunications goals.''
Since the last announcement on August 6, 1997, the Company has received approximately US$35 million in new orders for all its product lines, including the ETC contract mentioned above.
Gilat Chairman and Chief Executive Officer Yoel Gat remarked, ''I am pleased to report solid growth in all our lines of business. For example, with the new order, satellite telephony now accounts for more than 25% of our revenues, compared with 10% last year.''
Gilat Satellite Networks Ltd. designs, develops, manufactures, markets and supports Very Small Aperture Terminal (VSAT) satellite earth stations and related hub equipment and software. Gilat products are incorporated into telecommunications networks that provide satellite- based communications between a central location and a large number of geographically dispersed sites. The Company offers a range of products: Skystar Advantage, which incorporates Gilat's TwoWay VSAT into GE Spacenet's Skystar Advantage system, enables interactive, transaction- oriented applications; ISAT enables frame-relay delivery of voice and data; FaraWay VSAT offers multi-channel, toll-quality telephone service; DialAway VSAT offers single-channel, near toll-quality telephone service; SkySurfer VSAT, the Company's first PC plug-in card, delivers satellite-based Internet-access; OneWay VSAT provides unidirectional data broadcasts.
In December 1996, Gilat acquired Skydata Inc., a Florida-based VSAT company specializing in the paging and data broadcast markets. Gilat is in the process of changing the name of its Netherlands-based subsidiary, formerly known as Gilat Satellite Networks (Holland) BV, to Global Village Telecom BV (GVT), reflecting that company's new focus: the operation of rural telephony networks in remote areas. The goal of GVT is to provide services or to establish joint ventures or partnerships with local service providers in order to offer telephone and fax services using Gilat's thin-route telephony DialAway and FaraWay VSAT networks.
Skystar Advantage is a trademark of GE Capital Spacenet Services, Inc. and is a joint development of GE Capital Spacenet Services, Inc. and Gilat Satellite Networks Ltd. TwoWay, FaraWay, DialAway, SkySurfer and OneWay VSAT and are trademarks of Gilat Satellite Networks Ltd. ISAT is a trademark of Skydata, Inc. GSAT is a trademark of GTECH Corp. TerraSat is a trademark of COMSAT RSI, Inc.
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 the Company 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 the Company's products, inability to timely develop and introduce new technologies, products and applications, rapid changes in the market for the Company'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 the Company's international operations and its location in Israel. For additional information regarding these and other risks and uncertainties associated with the Company's business, reference is made to the Company's reports filed from time to time with the Securities and Exchange Commission.
Gilat Satellite Networks Ltd.
(an Israeli Corporation)
Condensed Consolidated Balance Sheets
US Dollars in Thousands
September 30, December 31,
1997 1996
(Unaudited) (Audited)
Assets
Current Assets:
Cash and cash equivalents $28,099 $28,400
Short term bank Deposit 20,470
Accounts receivable:
Trade 35,486 32,733
Israeli government depts. &
agencies 3,545 3,628
Other 7,529 4,009
Inventories 22,689 14,698
Total current assets 117,818 83,468
Investments and non-current receivables:
Long term bank deposit 40,000
Investments in companies and non-
current receivables 4,894 2,706
Investments in convertible notes 1,998
Deferred income taxes 802 357
47,694 3,063
Property, Plant and Equipment
Cost 37,100 30,131(a)
Less - accumulated depreciation and
amortization 6,130 4,461(a)
30,970 25,670
Deferred charges - net of accumulated
amortization 2,981
$199,463 112,201
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term bank credit 355 582
Current maturities of long-term debt
Accounts payable and accruals:
Trade 9,218 10,321
Other 10,418 9,496
Advances from customers 1,590 1,437
Total current liabilities 21,581 21,836
Convertible Subordinated Notes 75,000
Accrued Severance Pay 777 607
Total liabilities 97,358 22,443
Shareholders' Equity:
Share capital 39 39
Share Premium 72,757 71,627
Retained Earnings 29,309 18,092
102,105 89,758
$199,463 $112,201
(a) Reclassified
-0-
Gilat Satellite Networks Ltd.
(an Israeli Corporation)
Condensed Consolidated Income Statements
US Dollars in Thousands
Nine Months Ended Three Months Ended
Sept. 30 Sept. 30
1997 1996(a) 1997 1996(a)
(Unaudited) (Unaudited)
Sales $ 73,688 $ 52,911 $ 27,346 $ 19,594
Cost of Sales 42,384 30,423 15,223 10,966
Gross Profit 31,304 22,488 12,123 8,628
Research and Development Costs:
Expenses Incurred 7,385 6,143 2,744 2,352
Less-grants 1,756 1,476 609 597
Net R&D 5,629 4,667 2,135 1,755
Selling, General and
Administrative Expenses 15,029 10,280 5,587 3,214
Operating Income 10,646 7,541 4,401 3,659
Financial Income (Loss) - net 564 1,028 (45) 178
Other Income (Expenses) - net 45 1,245 11 (120)
Income before taxes on
income 11,255 9,814 4,367 3,717
Taxes on income 35 70 9 22
Net income 11,220 9,744 4,358 3,695
Earnings per share in
(US Dollars) $1.00 $ 0.88 $0.39 $ 0.34
Weighted average number of
shares outstanding
in thousands 11,256 11,069 11,276 11,027
(a) Restated to reflect acquisition of Skydata on a pooling of
interests basis.
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