Gilat Satellite Networks Ltd.
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|||
(Registrant)
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|||
Dated September 24, 2012
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By:
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/s/ Alon Levy | |
Alon Levy | |||
Corporate Secretary |
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1.
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Condensed Interim Consolidated Financial Statements of Gilat Satellite Networks Ltd. and its subsidiaries as of June 30, 2012.
|
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2.
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Selected Consolidated Financial Data and Management's Discussion and Analysis of Financial Condition and Results of Operations
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Page
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F2 - F3
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F4
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F5
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F6
|
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F7– F9
|
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F10– F22
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June 30,
2012
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December 31,
2011
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|||||||
Unaudited
|
||||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$ | 52,540 | $ | 56,231 | ||||
Short-term restricted cash
|
1,886 | 7,034 | ||||||
Restricted cash held by trustees
|
10,133 | 1,549 | ||||||
Trade receivables, net
|
58,223 | 51,654 | ||||||
Inventories
|
30,946 | 31,933 | ||||||
Other current assets
|
32,355 | 25,767 | ||||||
Total current assets
|
186,083 | 174,168 | ||||||
LONG-TERM INVESTMENTS AND RECEIVABLES:
|
||||||||
Severance pay funds
|
9,236 | 9,722 | ||||||
Long-term restricted cash
|
1,624 | 2,025 | ||||||
Long-term trade receivables, receivables in respect of capital leases and other receivables
|
19,308 | 20,219 | ||||||
Total long-term investments and receivables
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30,168 | 31,966 | ||||||
PROPERTY AND EQUIPMENT, NET
|
97,683 | 100,926 | ||||||
INTANGIBLE ASSETS, NET
|
48,033 | 49,927 | ||||||
GOODWILL
|
89,691 | 89,691 | ||||||
Total assets
|
$ | 451,658 | $ | 446,678 |
June 30,
2012
|
December 31,
2011
|
|||||||
Unaudited
|
||||||||
LIABILITIES AND EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Short-term bank credit
|
$ | 4,172 | $ | 2,971 | ||||
Current maturities of long-term loans and convertible subordinated notes
|
22,357 | 19,092 | ||||||
Trade payables
|
30,831 | 25,477 | ||||||
Accrued expenses
|
19,470 | 25,609 | ||||||
Short-term advances from customers held by trustees
|
6,553 | 1,551 | ||||||
Other current liabilities
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32,592 | 36,764 | ||||||
Total current liabilities
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115,975 | 111,464 | ||||||
LONG-TERM LIABILITIES:
|
||||||||
Long-term loans, net of current maturities
|
42,541 | 40,353 | ||||||
Accrued severance pay
|
9,270 | 9,445 | ||||||
Other long-term liabilities
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24,176 | 25,341 | ||||||
Total long-term liabilities
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75,987 | 75,139 | ||||||
COMMITMENTS AND CONTINGENCIES
|
||||||||
EQUITY:
|
||||||||
Share capital -
Ordinary shares of NIS 0.2 par value: Authorized - 60,000,000 shares at June 30, 2012 and December 31, 2011; Issued and outstanding – 41,413,302 and 41,182,011 shares at June 30, 2012 and December 31, 2011, respectively
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1,894 | 1,882 | ||||||
Additional paid-in capital
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868,174 | 867,098 | ||||||
Accumulated other comprehensive income
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1,285 | 541 | ||||||
Accumulated deficit
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(611,657 | ) | (609,446 | ) | ||||
Total equity
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259,696 | 260,075 | ||||||
Total liabilities and equity
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$ | 451,658 | $ | 446,678 |
Six months ended
June 30,
|
||||||||
2012
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2011
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|||||||
Unaudited
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Unaudited
|
|||||||
Revenue:
|
||||||||
Products
|
$ | 81,523 | $ | 98,808 | ||||
Services
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80,403 | 62,927 | ||||||
Total revenue
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161,926 | 161,735 | ||||||
Cost of revenue:
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||||||||
Products
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53,057 | 55,016 | ||||||
Services
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57,151 | 48,239 | ||||||
Total cost of revenue
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110,208 | 103,255 | ||||||
Gross profit
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51,718 | 58,480 | ||||||
Operating expenses:
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||||||||
Research and development costs, net
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14,891 | 15,991 | ||||||
Selling and marketing expenses
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20,751 | 23,192 | ||||||
General and administrative expenses
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16,274 | 18,107 | ||||||
Costs related to acquisition transactions
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- | 256 | ||||||
Operating income (loss)
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(198 | ) | 934 | |||||
Financial expenses, net
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(2,015 | ) | (737 | ) | ||||
Other income
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- | 1,826 | ||||||
Income (loss) before taxes on income
|
(2,213 | ) | 2,023 | |||||
Taxes on income (tax benefit)
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(2 | ) | 644 | |||||
Net income (loss)
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$ | (2,211 | ) | $ | 1,379 | |||
Net income (loss) per share:
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||||||||
Basic
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$ | (0.05 | ) | $ | 0.03 | |||
Diluted
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$ | (0.05 | ) | $ | 0.03 | |||
Weighted average number of shares used in computing net income (loss) per share:
|
||||||||
Basic
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41,288,247 | 40,807,338 | ||||||
Diluted
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41,288,247 | 42,113,951 |
Six months ended
June 30,
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||||||||
2012
|
2011
|
|||||||
Unaudited
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Unaudited
|
|||||||
Net Income (loss)
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$ | (2,211 | ) | $ | 1,379 | |||
Other comprehensive income:
|
||||||||
Foreign currency translation adjustments
|
146 | (256 | ) | |||||
Unrealized gain on forward contracts, net
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598 | 103 | ||||||
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||||||||
Comprehensive income (loss)
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$ | (1,467 | ) | $ | 1,226 |
Number of
Ordinary shares
(in thousands)
|
Share
capital
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Additional
paid-in
capital
|
Accumulated
other
comprehensive
income ***)
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Accumulated
deficit
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Total
shareholders'
equity
|
|||||||||||||||||||
Balance as of January 1, 2011
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40,698 | $ | 1,855 | $ | 865,080 | $ | 774 | $ | (603,596 | ) | $ | 264,113 | ||||||||||||
Issuance of restricted share units
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484 | 27 | - | - | - | 27 | ||||||||||||||||||
Stock-based compensation of options and RSUs
related to employees and non- employees
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- | - | 2,009 | - | - | 2,009 | ||||||||||||||||||
Conversion of convertible subordinated notes
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**) - | *) - | 9 | - | - | 9 | ||||||||||||||||||
Other comprehensive loss
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- | - | - | (233 | ) | - | (233 | ) | ||||||||||||||||
Net loss
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- | - | - | - | (5,850 | ) | (5,850 | ) | ||||||||||||||||
Balance as of December 31, 2011
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41,182 | 1,882 | 867,098 | 541 | (609,446 | ) | 260,075 | |||||||||||||||||
Issuance of restricted share units
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231 | 12 | - | - | - | 12 | ||||||||||||||||||
Stock-based compensation of options and RSUs
related to employees and non- employees
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- | - | 1,076 | - | - | 1,076 | ||||||||||||||||||
Other comprehensive income
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- | - | - | 744 | - | 744 | ||||||||||||||||||
Net loss
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- | - | - | - | (2,211 | ) | (2,211 | ) | ||||||||||||||||
Balance as of June 30, 2012 (unaudited)
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41,413 | $ | 1,894 | $ | 868,174 | $ | 1,285 | $ | (611,657 | ) | $ | 259,696 |
*)
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Represents an amount lower than $ 1.
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**)
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Represents an amount lower than 1 thousand shares.
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***)
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Represents adjustments in respect of foreign currency translation and unrealized gain on forward contracts, net. The balance of accumulated other comprehensive income as of June 30, 2012 and December 31, 2011 included foreign currency translation adjustments in the amounts of $ 1,486 and $ 1,340, respectively, and unrealized loss on forward contracts, net, in the amount of $ (201) and $ (799), respectively.
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Six months ended
June 30,
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||||||||
2012
|
2011
|
|||||||
Unaudited
|
||||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
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$ | (2,211 | ) | $ | 1,379 | |||
Adjustments required to reconcile net income (loss) to net cash used in operating activities:
|
||||||||
Depreciation and amortization
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10,698 | 12,369 | ||||||
Stock based compensation
|
1,076 | 1,056 | ||||||
Accrued severance pay, net
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311 | (193 | ) | |||||
Accrued interest and exchange rate differences on short and long-term restricted cash, net
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(69 | ) | (28 | ) | ||||
Exchange rate differences on long-term loans
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(124 | ) | 522 | |||||
Capital loss (gain) from disposal of property and equipment
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(3 | ) | 69 | |||||
Deferred income taxes
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(330 | ) | 370 | |||||
Decrease (increase) in trade receivables, net
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(7,114 | ) | 19 | |||||
Increase in other assets (including short-term, long-term and deferred charges)
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(5,428 | ) | (18,934 | ) | ||||
Increase in inventories
|
(395 | ) | (986 | ) | ||||
Increase (decrease) in trade payables
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5,409 | (424 | ) | |||||
Decrease in accrued expenses
|
(6,147 | ) | (1,022 | ) | ||||
Increase (decrease) in advances from customer, held by trustees, net
|
5,002 | (1,004 | ) | |||||
Decrease in other accounts payable and other long-term liabilities
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(5,719 | ) | (1,562 | ) | ||||
Net cash used in operating activities
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(5,044 | ) | (8,369 | ) | ||||
Cash flows from investing activities:
|
||||||||
Purchase of property and equipment
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(2,166 | ) | (3,892 | ) | ||||
Investment in restricted cash held by trustees
|
(17,620 | ) | - | |||||
Proceeds from restricted cash held by trustees
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9,075 | 1,016 | ||||||
Investment in restricted cash (including long-term)
|
(9,114 | ) | (12,142 | ) | ||||
Proceeds from restricted cash (including long-term)
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14,624 | 14,091 | ||||||
Proceeds from working capital adjustment to subsidiary purchase price
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- | 1,465 | ||||||
Acquisition of subsidiary, net of cash acquired (a)
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- | (1,867 | ) | |||||
Purchase of intangible asset
|
(72 | ) | (21 | ) | ||||
Net cash used in investing activities
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$ | (5,273 | ) | $ | (1,350 | ) |
Six months ended
June 30,
|
||||||||
2012
|
2011
|
|||||||
Unaudited
|
||||||||
Cash flows from financing activities:
|
||||||||
Issuance of restricted stock units
|
$ | 12 | $ | 14 | ||||
Repayment of convertible notes
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- | (394 | ) | |||||
Short-term bank credit, net
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1,201 | (275 | ) | |||||
Proceeds from long-term loans
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10,000 | - | ||||||
Repayments of long-term loans
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(4,423 | ) | (852 | ) | ||||
Net cash provided by (used in) financing activities
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6,790 | (1,507 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents
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(164 | ) | 102 | |||||
Decrease in cash and cash equivalents
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(3,691 | ) | (11,124 | ) | ||||
Cash and cash equivalents at the beginning of the period
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56,231 | 57,238 | ||||||
Cash and cash equivalents at the end of the period
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$ | 52,540 | $ | 46,114 |
Supplementary cash flow activities:
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|||||||||
(1)
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Cash paid during the period for:
|
||||||||
Interest
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$ | 1,456 | $ | 541 | |||||
Income taxes
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$ | 576 | $ | 784 | |||||
(2)
|
Non-cash transactions-
|
||||||||
Conversion of long-term convertible subordinated notes to ordinary shares
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$ | - | $ | 9 | |||||
Classification from inventories to property and equipment
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$ | 1,204 | $ | 585 | |||||
Classification from property and equipment to inventories
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$ | 614 | $ | 78 | |||||
Purchase of intangible assets
|
$ | 2,005 | $ | - |
Six months
|
|||||
ended June 30,
|
|||||
2011
|
|||||
(a)
|
Payment for the acquisition of Cicat (see also Note 1c):
|
||||
Estimated fair value of assets acquired and liabilities assumed at the acquisition date:
|
|||||
Working capital (excluding cash and cash equivalents)
|
$ | 226 | |||
Property and equipment, net
|
42 | ||||
Intangible assets
|
720 | ||||
Goodwill
|
1,890 | ||||
Other non-current assets
|
209 | ||||
Long-term liabilities
|
(398 | ) | |||
Contingent consideration
|
(822 | ) | |||
$ | 1,867 |
NOTE 1:
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GENERAL
|
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a.
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Organization:
|
|
·
|
Commercial Satcom provides VSAT networks, satellite communication products and associated professional services to service providers and operators worldwide, including consumer Ka-band initiatives worldwide.
|
|
·
|
Defense Satcom provides satellite communication products and solutions to defense and homeland security organizations worldwide.
|
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·
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Services, which includes Spacenet Inc., provides managed network services for business, government and residential customers in North America, and Gilat's service businesses in Peru and Colombia, offer rural telephony and Internet access solutions.
|
|
b.
|
Impairment of Goodwill
|
NOTE 1:
|
GENERAL (Cont.)
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|
c.
|
Business combination - acquisition of Cicat Networks Inc, ("CICAT"):
|
Cash
|
$ | 134 | ||
Other current assets
|
1,301 | |||
Non-current assets
|
209 | |||
Property and equipment
|
42 | |||
Intangible assets:
|
||||
Customer relationships
|
626 | |||
Backlog
|
94 | |||
Goodwill
|
1,890 | |||
Current liabilities
|
(1,075 | ) | ||
Long-term liabilities
|
(398 | ) | ||
Net assets acquired
|
$ | 2,823 |
|
d.
|
The Company depends on a major supplier to supply certain components and services for the production of its products or providing services. If this supplier fails to deliver or delays the delivery of the necessary components or services, the Company will be required to seek alternative sources of supply. A change in suppliers could result in manufacturing delays or services delays which could cause a possible loss of sales and, or, additional incremental costs and, consequently, could adversely affect the Company's results of operations and financial position.
|
NOTE 2:
|
SIGNIFICANT ACCOUNTING POLICIES
|
|
a.
|
The significant accounting policies applied in the financial statements of the Company as of December 31, 2011, are applied consistently in these financial statements (please refer also to note 2d - Accounting Standards Adopted for the first time).
|
|
b.
|
Fair value of financial instruments:
|
|
c.
|
Principles of consolidation:
|
NOTE 2:
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
d.
|
Accounting Standards Adopted for the first time:
|
NOTE 2:
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
e.
|
Impact of recently issued accounting standards:
|
NOTE 3:
|
UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 3:
|
UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
|
NOTE 4:
|
INVENTORIES
|
|
a.
|
Inventories are comprised of the following:
|
June 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
Unaudited
|
||||||||
Raw materials, parts and supplies
|
$ | 11,073 | $ | 11,172 | ||||
Work in progress
|
1,351 | 1,267 | ||||||
Finished products
|
18,522 | 19,494 | ||||||
$ | 30,946 | $ | 31,933 |
b.
|
Inventory write-offs for the six months ended June 30, 2012 and 2011, totaled $ 303 and $ 101, respectively.
|
NOTE 5:
|
CONTINGENCIES
|
|
a.
|
In September 2003, Nova Mobilcom S.A. ("Mobilcom"), filed a lawsuit against Gilat do Brasil for specific performance of a Memorandum of Understandings which provided for the sale of Gilat do Brasil, and specifically the GESAC project, a government education project awarded to Gilat do Brazil, to Mobilcom for an unspecified amount. The court ruled in favor of Gilat. Nova Mobilcom filed an appeal and a motion to the State Court of Appeals to which the Group has replied and which were both rejected. The Group does not believe that this claim has any merit and awaits publication of the court's decision on the motion in order to verify whether Mobilcom will attempt to reverse the decision in the Brazilian Higher Courts.
|
NOTE 5:
|
CONTINGENCIES (Cont.)
|
|
b.
|
In 2003, the Brazilian tax authority filed a claim against a subsidiary of Spacenet in Brazil, for alleged taxes due of approximately $ 4,000. In January 2004 and December 2005, the subsidiary filed its administrative defense which was denied by the first and second level courts, respectively. In September 2006, the subsidiary filed an annulment action seeking judicial cancellation of the claim. In May 2009, the subsidiary received notice of the court's first level decision which cancelled a significant part of the claim but upheld two items of the assessment. Under this decision, the subsidiary's liability was reduced to approximately $ 1,530. This decision was appealed by both the subsidiary and the State tax authorities and in June 2012, the São Paulo Court of Appeals issued a decision unfavorable to the subsidiary. As of June 30, 2012, the subsidiary faces an exposure of approximately $ 13,500 due to interest, penalties, Sao Paulo legal fees and exchange rate differences. The subsidiary will appeal to the Brazilian Higher Courts and the Group and its legal counsel believe that it has reasonably possible chances of success of reversing the unfavorable decision. It is noted that based on the Group’s Brazilian legal counsel’s opinion, the Group believes that the period for the inclusion of any additional co-obligors in the tax foreclosure records in addition to those entities and individuals already cited in the tax foreclosure (which include the subsidiary), expired on February 7, 2012. Accordingly the Group based on the Group’s Brazilian legal counsel’s opinion, believes that there cannot be a redirection by the tax authorities of the tax foreclosure to any of the other Group’s entities which have not been cited in the tax foreclosure. Therefore based on the Group’s Brazilian legal counsel’s opinion the Group believes that the chances of redirection of the tax foreclosure to any of the Group’s entities which have not been cited in the foreclosure, and that such redirection of the tax foreclosure by tax authorities will result in a loss recognition, are remote.
|
|
c.
|
In November 2009, a lawsuit was filed in the Central District Court in Israel by eight individuals and Israeli companies against the Company, all of its directors and its 20% shareholder, York Capital Management, and its affiliates. The plaintiffs claim damages based on the amounts they would have been paid had a merger agreement signed on March 31, 2008 with a consortium of buyers closed. On October 24, 2010 the Group filed its defense. The parties have completed testimony and will submit written summaries, after which the Court will hear oral argument on September 27, 2012. The lawsuit, seeking damages of approximately $ 12,400, is similar to the lawsuit and motion for its approval as a class action proceeding previously filed by the same group of Israeli shareholders in October 2008. The October 2008 lawsuit and motion were withdrawn by the plaintiffs in July 2009 at the recommendation of the Court, which questioned the basis for the lawsuit. The Company and its independent legal counsel believe the claims are completely without merit, and that the lawsuit is without basis. The Company intends to use all legal means necessary to protect and defend the Company and its directors.
|
NOTE 5:
|
CONTINGENCIES (Cont.)
|
|
d.
|
In December 2010, a lawsuit was filed against the Group in the Superior Court in Orange County, California by STM Group Inc. and Emil Youssefzadeh claiming damages for tortuous interference with contract and defamation for alleged actions in Peru. The complaint seeks damages of approximately $6,000 in connection with the contract claim by STM Group, an unstated amount by Mr. Youssefzadeh, and exemplary damages and costs. The action was removed to the US District Court for the Central District of California and in March 2011, the Group moved to dismiss the complaint on several grounds. The court granted the Group's motion and in August 2011, the STM Group filed an order of dismissal. The STM Group may seek to bring an action in Peru against the Group.
|
|
e.
|
The Group has certain tax exposures in some of the jurisdictions in which it conducts business. Specifically, in certain jurisdictions in the United States and in Latin America the Group is in the midst of different stages of audits and has received certain tax assessments. The tax authorities in these and in other jurisdictions in which the Group operates as well as the Israeli Tax Authorities may raise additional claims, which might result in increased exposures and ultimately, payment of additional taxes.
|
|
f.
|
The Group has accrued $ 9,829 and $ 10,728 as of June 30, 2012 and December 31, 2011, respectively, for the expected implications of such legal and tax contingencies. These accruals are comprised of $ 8,840 and $ 9,649 of tax related accruals as of June 30, 2012 and December 31, 2011, respectively, and $ 989 and $ 1,079 of legal and other accruals as of June 30, 2012 and December 31, 2011, respectively. The accruals related to tax contingencies have been assessed by the Group's management based on the advice of both internal and external legal and tax advisers. The total estimated exposure for the aforementioned tax related accruals is $ 28,297 and $ 29,726 as of June 30, 2012 and December 31, 2011, respectively. The estimated exposure for legal and other related accruals is $ 4,355 and $ 4,450 as of June 30, 2012 and December 31, 2011, respectively.
|
NOTE 6:
|
NET INCOME (LOSS) PER SHARE
|
|
1.
|
Numerator:
|
Six months ended
June 30,
|
||||||||
2012 |
2011
|
|||||||
Unaudited
|
||||||||
Numerator for basic and diluted net loss per share -
|
||||||||
Net income (loss) available to
|
||||||||
Ordinary shareholders
|
$ | (2,211 | ) | $ | 1,379 |
|
2.
|
Denominator (in thousands):
|
Six months ended
June 30,
|
||||||||
2012
|
2011
|
|||||||
Unaudited
|
||||||||
Denominator for basic net income (loss) per share -
|
||||||||
Weighted average number of shares
|
41,288 | 40,807 | ||||||
Add - employee stock options, RSUs and convertible notes
|
*) - | 1,307 | ||||||
Denominator for diluted net income (loss) per share - adjusted weighted average shares assuming exercise of options
|
41,288 | 42,114 |
*)
|
Anti-dilutive
|
NOTE 7:
|
HEDGING INSTRUMENTS
|
NOTE 8:
|
CUSTOMERS, GEOGRAPHIC AND SEGMENTS INFORMATION
|
|
a.
|
Revenues by geographic areas:
|
Six months ended
|
||||||||
June 30,
|
||||||||
2012
|
2011
|
|||||||
Unaudited
|
||||||||
United States
|
$ | 54,823 | $ | 82,409 | ||||
Latin America
|
54,719 | 42,014 | ||||||
Asia and Asia Pacific
|
37,468 | 21,951 | ||||||
Africa
|
4,857 | 5,735 | ||||||
Europe
|
10,059 | 9,626 | ||||||
$ | 161,926 | $ | 161,735 |
NOTE 8:
|
CUSTOMERS, GEOGRAPHIC AND SEGMENTS INFORMATION (Cont.)
|
|
b.
|
One major customer accounted for 12% of the total consolidated revenues for the six months ended June 30, 2012, and another major customer accounted for 11% of total consolidated revenues for the six months ended June 30, 2011.
|
|
c.
|
The Group's long-lived assets are located as follows:
|
June 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
Unaudited
|
||||||||
Israel
|
$ | 72,266 | $ | 73,760 | ||||
United States
|
11,043 | 12,490 | ||||||
Latin America
|
4,702 | 4,867 | ||||||
Europe
|
9,072 | 9,197 | ||||||
Other
|
600 | 612 | ||||||
$ | 97,683 | $ | 100,926 |
|
d.
|
Information on operating segments: see Note 1a.
|
|
e.
|
Information on the reportable segments:
|
1.
|
The measurement of the reportable operating segments is based on the same accounting principles applied in these financial statements.
|
2.
|
Certain figures have been reclassified to conform to the 2011 presentation. The reclassification had no effect on previously reported net income.
|
NOTE 8:
|
CUSTOMERS, GEOGRAPHIC AND SEGMENTS INFORMATION (Cont.)
|
3.
|
Financial data relating to reportable operating segments:
|
Six months ended June 30, 2012 (unaudited)
|
||||||||||||||||
Commercial
|
Defense
|
Services
|
Total
|
|||||||||||||
Revenues
|
68,585 | 28,351 | 64,990 | 161,926 | ||||||||||||
Cost of Revenues
|
42,459 | 20,971 | 46,778 | 110,208 | ||||||||||||
Gross profit
|
26,126 | 7,380 | 18,212 | 51,718 | ||||||||||||
R&D expenses:
|
||||||||||||||||
Expenses incurred
|
10,031 | 6,544 | - | 16,575 | ||||||||||||
Less - grants
|
1,194 | 490 | - | 1,684 | ||||||||||||
8,837 | 6,054 | - | 14,891 | |||||||||||||
Selling and marketing
|
11,643 | 4,612 | 4,496 | 20,751 | ||||||||||||
General and administrative
|
5,455 | 1,900 | 8,919 | 16,274 | ||||||||||||
Operating income (loss)
|
191 | (5,186 | ) | 4,797 | (198 | ) | ||||||||||
Financial expenses, net
|
(2,015 | ) | ||||||||||||||
Loss before taxes
|
(2,213 | ) | ||||||||||||||
Tax benefit
|
(2 | ) | ||||||||||||||
Net loss
|
(2,211 | ) |
Six months ended June 30, 2011 (unaudited)
|
||||||||||||||||
Commercial
|
Defense
|
Services
|
Total
|
|||||||||||||
Revenues
|
53,129 | 35,208 | 73,398 | 161,735 | ||||||||||||
Cost of Revenues
|
28,752 | 22,952 | 51,551 | 103,255 | ||||||||||||
Gross profit
|
24,377 | 12,256 | 21,847 | 58,480 | ||||||||||||
R&D expenses:
|
||||||||||||||||
Expenses incurred
|
9,562 | 8,164 | - | 17,726 | ||||||||||||
Less - grants
|
1,385 | 350 | - | 1,735 | ||||||||||||
|
8,177 | 7,814 | - | 15,991 | ||||||||||||
Selling and marketing
|
11,435 | 5,082 | 6,675 | 23,192 | ||||||||||||
General and administrative
|
5,663 | 3,476 | 8,968 | 18,107 | ||||||||||||
Costs related to acquisition transactions
|
39 | - | 217 | 256 | ||||||||||||
Operating income (loss)
|
(937 | ) | (4,116 | ) | 5,987 | 934 | ||||||||||
Financial expenses, net
|
(737 | ) | ||||||||||||||
Other Income
|
1,826 | |||||||||||||||
Income before taxes
|
2,023 | |||||||||||||||
Taxes on income
|
644 | |||||||||||||||
Net income
|
1,379 |
NOTE 9:
|
SELECTED STATEMENTS OF OPERATIONS DATA
|
June 30,
|
||||
2011
|
||||
Unaudited
|
||||
Adjustments to the fair value of the contingent consideration from acquisition
|
$ | 2,539 | ||
Other
|
(713 | ) | ||
$ | 1,826 |
Six months ended
June 30,
|
||||||||
2012
|
2011
|
|||||||
U.S. dollars in thousands (except share and per share data)
|
||||||||
Unaudited
|
Unaudited
|
|||||||
Statement of Operations Data:
|
||||||||
Revenues:
|
||||||||
Products
|
$ | 81,523 | $ | 98,808 | ||||
Services
|
80,403 | 62,927 | ||||||
161,926 | 161,735 | |||||||
Cost of revenues:
|
||||||||
Products
|
53,057 | 55,016 | ||||||
Services
|
57,151 | 48,239 | ||||||
110,208 | 103,255 | |||||||
Gross profit
|
51,718 | 58,480 | ||||||
Operating expenses:
|
||||||||
Research and development expenses, net
|
14,891 | 15,991 | ||||||
Selling and marketing expenses
|
20,751 | 23,192 | ||||||
General and administrative expenses
|
16,274 | 18,107 | ||||||
Costs related to acquisition transactions
|
- | 256 | ||||||
Operating income (loss)
|
(198 | ) | 934 | |||||
Financial expenses, net
|
(2,015 | ) | (737 | ) | ||||
Other income, net
|
- | 1,826 | ||||||
Income (loss) before taxes on income
|
(2,213 | ) | 2,023 | |||||
Taxes on income (tax benefit)
|
(2 | ) | 644 | |||||
Net income (loss)
|
$ | (2,211 | ) | $ | 1,379 | |||
Net earnings (loss) per share:
|
||||||||
Basic
|
(0.05 | ) | 0.03 | |||||
Diluted
|
(0.05 | ) | 0.03 | |||||
Weighted average number of shares used in computing net earnings (loss) per share:
|
||||||||
Basic
|
41,288,247 | 40,807,338 | ||||||
Diluted
|
41,288,247 | 42,113,951 |
June 30,
2012
|
December 31,
2011
|
|||||||
U.S. dollars in thousands
|
||||||||
Unaudited
|
Unaudited | |||||||
Balance Sheet Data:
|
||||||||
Working capital
|
$ | 70,108 | $ | 62,704 | ||||
Total assets. .
|
451,658 | 446,678 | ||||||
Short-term bank credit and current
maturities of long-term loans and
convertible notes
|
26,529 | 22,063 | ||||||
Other long-term liabilities
|
75,987 | 75,139 | ||||||
Shareholders’ equity
|
$ | 259,696 | $ | 260,075 | ||||
|
·
|
Gilat Worldwide, comprised of two segments:
|
|
o
|
Gilat International, a provider of VSAT-based networks and associated professional services, including turnkey and management services, to telecom operators worldwide. Since our acquisition of Raysat Antenna Systems, or RAS, Gilat International is also a provider of low-profile antennas, used for satellite-on-the-move communications, or Satcom-On-The-Move, antenna solutions.
|
|
o
|
Gilat Peru & Colombia, a provider of telephony, Internet and data services primarily for rural communities in Peru and Colombia under projects that are subsidized by government entities;
|
|
·
|
Spacenet Inc., a provider of managed network communications services, utilizing satellite wireline and wireless networks and associated technology, to enterprises, government, small office/home office, or SOHOs, and residential customers primarily in the United States, but also in locations throughout North America;
|
|
·
|
Wavestream, a provider of high power solid state power amplifiers, or SSPAs, Block Upconverters, or BUCs, with field-proven, high performance solutions designed for mobile and fixed satellite communication, or SATCOM, systems worldwide, primarily in the defense market.
|
|
·
|
Commercial Satcom provides VSAT networks, satellite communication products and associated professional services to service providers and operators worldwide, including consumer Ka-band initiatives worldwide.
|
|
·
|
Defense Satcom provides satellite communication products and solutions to defense and homeland security organizations worldwide.
|
|
·
|
Services, which includes Spacenet Inc., provides managed network services for business, government and residential customers in North America, as well as Gilat's service businesses in Peru and Colombia, offer rural telephony and Internet access solutions.
|
Six months ended
|
Six months ended
|
|||||||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||||||
2012
|
2011
|
Percentage
|
2012
|
2011
|
||||||||||||||||
U.S. dollars in thousands
|
change
|
Percentage of revenues
|
||||||||||||||||||
Unaudited
|
Unaudited | Unaudited | Unaudited | Unaudited | ||||||||||||||||
Commercial
|
||||||||||||||||||||
Equipment
|
$ | 46,764 | $ | 42,945 | 8.9 | % | 28.9 | % | 26.5 | % | ||||||||||
Services
|
21,821 | 10,184 | 114.3 | % | 13.5 | % | 6.3 | % | ||||||||||||
68,585 | 53,129 | 29.1 | % | 42.4 | % | 32.8 | % | |||||||||||||
Defense
|
||||||||||||||||||||
Equipment
|
26,652 | 34,714 | (23.2 | )% | 16.5 | % | 21.5 | % | ||||||||||||
Services
|
1,699 | 494 | 243.9 | % | 1.0 | % | 0.3 | % | ||||||||||||
28,351 | 35,208 | (19.5 | )% | 17.5 | % | 21.8 | % | |||||||||||||
Services
|
||||||||||||||||||||
Equipment
|
8,107 | 21,149 | (61.7 | )% | 5.0 | % | 13.1 | % | ||||||||||||
Services
|
56,883 | 52,249 | 8.9 | % | 35.1 | % | 32.3 | % | ||||||||||||
64,990 | 73,398 | (11.5 | )% | 40.1 | % | 45.4 | % | |||||||||||||
Total
|
||||||||||||||||||||
Equipment
|
81,523 | 98,808 | (17.5 | )% | 50.4 | % | 61.1 | % | ||||||||||||
Services
|
80,403 | 62,927 | 27.8 | % | 49.6 | % | 38.9 | % | ||||||||||||
Total
|
$ | 161,926 | $ | 161,735 | 0.1 | % | 100.0 | % | 100.0 | % |
Six months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
U.S. dollars in thousands
|
Percentage of revenues per segment
|
|||||||||||||||
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|||||||||||||
Commercial
|
||||||||||||||||
Equipment
|
$ | 19,387 | $ | 20,595 | 41.5 | % | 48.0 | % | ||||||||
Services
|
6,739 | 3,782 | 30.9 | % | 37.1 | % | ||||||||||
26,126 | 24,377 | 38.1 | % | 45.9 | % | |||||||||||
Defense
|
||||||||||||||||
Equipment
|
6,626 | 12,132 | 24.9 | % | 34.9 | % | ||||||||||
Services
|
754 | 124 | 44.4 | % | 25.1 | % | ||||||||||
7,380 | 12,256 | 26.0 | % | 34.8 | % | |||||||||||
Services
|
||||||||||||||||
Equipment
|
2,453 | 11,065 | 30.3 | % | 52.3 | % | ||||||||||
Services
|
15,759 | 10,782 | 27.7 | % | 20.6 | % | ||||||||||
18,212 | 21,847 | 28.0 | % | 29.8 | % | |||||||||||
Total
|
||||||||||||||||
Equipment
|
28,466 | 43,792 | 34.9 | % | 44.3 | % | ||||||||||
Services
|
23,252 | 14,688 | 28.9 | % | 23.3 | % | ||||||||||
Total
|
$ | 51,718 | $ | 58,480 | 31.9 | % | 36.2 | % |
Six months ended
|
Six months ended
|
|||||||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||||||
2012
|
2011
|
Percentage
|
2012
|
2011
|
||||||||||||||||
U.S. dollars in thousands
|
change
|
Percentage of revenues per segment
|
||||||||||||||||||
Unaudited |
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
||||||||||||||||
Commercial
|
||||||||||||||||||||
Expenses incurred
|
$ | 10,031 | $ | 9,562 | 4.9 | % | 14.6 | % | 18.0 | % | ||||||||||
Less - grants
|
1,194 | 1,385 | (13.8 | )% | 1.7 | % | 2.6 | % | ||||||||||||
8,837 | 8,177 | 8.1 | % | 12.9 | % | 15.4 | % | |||||||||||||
Defense
|
||||||||||||||||||||
Expenses incurred
|
6,544 | 8,164 | (19.8 | )% | 23.1 | % | 23.2 | % | ||||||||||||
Less - grants
|
490 | 350 | 40.0 | % | 1.7 | % | 1.0 | % | ||||||||||||
6,054 | 7,814 | (22.5 | )% | 21.4 | % | 22.2 | % | |||||||||||||
Total, net
|
$ | 14,891 | $ | 15,991 | (6.9 | )% | 15.4 | % | 18.1 | % |
Six months ended
|
Six months ended
|
|||||||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||||||
2012
|
2011
|
Percentage
|
2012
|
2011
|
||||||||||||||||
U.S. dollars in thousands
|
change
|
Percentage of revenues per segment
|
||||||||||||||||||
Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | ||||||||||||||||
Commercial
|
$ | 11,643 | $ | 11,435 | 1.8 | % | 17.0 | % | 21.5 | % | ||||||||||
Defense
|
4,612 | 5,082 | (9.2 | )% | 16.3 | % | 14.4 | % | ||||||||||||
Services
|
4,496 | 6,675 | (32.6 | )% | 6.9 | % | 9.1 | % | ||||||||||||
Total
|
$ | 20,751 | $ | 23,192 | (10.5 | )% | 12.8 | % | 14.3 | % |
Six months ended
|
Six months ended
|
|||||||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||||||
2012
|
2011
|
Percentage
|
2012
|
2011
|
||||||||||||||||
U.S. dollars in thousands
|
change
|
Percentage of revenues per segment
|
||||||||||||||||||
Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | ||||||||||||||||
Commercial
|
$ | 5,455 | $ | 5,663 | (3.7 | )% | 8.0 | % | 10.7 | % | ||||||||||
Defense
|
1,900 | 3,476 | (45.3 | )% | 6.7 | % | 9.9 | % | ||||||||||||
Services
|
8,919 | 8,968 | (0.5 | )% | 13.7 | % | 12.2 | % | ||||||||||||
Total
|
$ | 16,274 | $ | 18,107 | (10.1 | )% | 10.1 | % | 11.2 | % |
Six months ended June 30,
|
||||||||
2012
|
2011
|
|||||||
US Dollars in thousands
|
||||||||
Unaudited | Unaudited | |||||||
Net cash used in operating activities
|
$ | (5,044 | ) | $ | (8,369 | ) | ||
Net cash used in investing activities
|
(5,273 | ) | (1,350 | ) | ||||
Net cash provided by (used in) financing activities
|
6,790 | (1,507 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents
|
(164 | ) | 102 | |||||
Net decrease in cash and cash equivalents
|
(3,691 | ) | (11,124 | ) | ||||
Cash and cash equivalents at beginning of the period
|
56,231 | 57,238 | ||||||
Cash and cash equivalents at end of the period
|
$ | 52,540 | $ | 46,114 |
SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Fair value of financial instruments | ||
Convertible subordinated notes estimated fair value | $ 14,323 | $ 13,937 |
Customer advances | ||
Restricted cash held by trustees | 10,133 | 1,549 |
Short-term advances from customers held by trustees | $ 6,553 | $ 1,551 |
GENERAL
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GENERAL [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GENERAL |
Gilat Satellite Networks Ltd. (the "Company" or "Gilat") and its subsidiaries (the "Group") is a global provider of Internet Protocol, or IP, based digital satellite communication and networking products and services. The Group designs, produces and markets VSATs, or very small aperture terminals, and related VSAT network equipment. VSATs are earth based terminals that transmit and receive broadband, Internet, voice, data and video via satellite. VSAT networks combine a large central earth station, called a hub, with multiple remote sites (ranging from tens to thousands of sites), which communicate via satellite. In addition, following the acquisition of Raysat Antenna Systems ("RAS") on July 1, 2010, the group develops and provides Satcom-on-the-move antenna solutions. Following the acquisition of Wavestream Corp. ("Wavestream") on November 29, 2010, the Group develops and designs high power solid state amplifiers for military and commercial broadband communications, radar and imaging. Gilat was incorporated in Israel in 1987 and launched its first generation VSAT in 1989. For a description of principal markets and customers, see Note 8. Commencing 2012, in accordance with the Company organizational changes instituted at the beginning of 2012, the Company's business is managed and reported as three separate reportable segments, comprised of the Company's newly named Commercial Satcom, Defense Satcom and Services divisions:
The continuing pressure on the Department of Defense (DOD) budget in the United State along with some uncertainties in its future spending resulted in the reduction of Wavestream revenues in 2011 compared to 2011 forecast and to 2010 revenues. This reduction led the Company to assess Wavestream's implied value in accordance with ASC 350 "Intangibles - Goodwill and Others". As a result of the impairment test, the Company recorded an impairment goodwill loss in the amount of $17,900. This amount was recorded as part of "Impairment of goodwill and restructuring costs" in the 2011 annual Statement of Operations. The Company continues to monitor the results of its reporting units, including Wavestream whose revenues continue to be affected by declining DOD budget, and expects to perform an annual goodwill impairment test, in respect with its reporting units, in December 2012.
On April 13, 2011 the Group completed the acquisition of all of the outstanding shares of CICAT, a provider of terrestrial access and network services to enterprises with multi-site locations. The CICAT operation is included in the Services segment. CICAT was acquired for approximately $ 2,823 out of which $ 822 represents the fair value of the potential contingent consideration according to the estimation of the Company's management and was accrued in the Group's financial statements. The nominal value of the contingent earn- out consideration is for up to $ 1,170 and is based on an agreed upon revenues target for CICAT during 2011-2013. This amount was classified as other current liabilities and other long term liabilities, as applicable. The derived goodwill from this acquisition is attributable to the additional capabilities of the Group to expand its services, abilities and offerings and to establish relationships with key partners. The goodwill amount is not deductible for tax purposes. Customer relationships and backlog in the amount of $ 720 are being amortized at an annual weighted average of 7.8 years. The following table summarizes the estimated fair values of CICAT's assets acquired and liabilities assumed and related deferred income taxes as of the acquisition date:
|