Gilat Communications Ltd. Reports Record Operating Results for the Second Quarter and First Half of 1999 - Company Financial Information

Cambridge Telcom Report, August 23, 1999

Gilat Communications Ltd. (NASDAQ: GICOF) has announced financial results for the second quarter and six months ended June 30, 1999, which showed increases in net income of 48 percent and 70 percent, respectively, over the same periods last year.

Total revenues for the second quarter increased 68 percent to US$ 8.42 million, from US$ 5.0 million in the same quarter of 1998. Net income for the three months ended June 30, 1999 was US$1.48 million or US$ 0.16 per share compared with US$1.0 million (US$ 0.11 per share) for the same period last year, representing a 48 percent increase.

Total revenues for the six months ended June 30, 1999, were US$15.27 million, a 67 percent increase over the same period in 1998, when the Company had revenues of US$9.15 million. Net Income for the six months ended June 30, 1999, was US$2.76 million or US$0.29 per share compared with US$1.62 million (US$ 0.17 per share), a 70 percent increase.

Commenting on the quarter, Gilat CEO Mr. Shlomo Tirosh said, "This quarter was significant not only for our record results, but also because of our successful penetration of the European and Chinese markets, both of which offer great promise for our solutions. Our systems were delivered to customers in the UK and China who intend to provide training services using Gilat's TrainNet systems, further positioning our company as an end-to-end training services provider."

Gilat Communications, Ltd. ("Gilat") is a leading developer and provider of end-to-end interactive distance learning (IDL) solutions worldwide. Founded in 1990, the Company provides a wide range of satellite-based communications services, including private data, IP and voice communications networks and digital video broadcasting over IP multicast. Gilat's comprehensive IDL solutions allow corporations, banks, government agencies and academic institutions to create and conduct live as well as offline instructor-led or self-paced classrooms utilizing personal computers, regular telephone sets, Internet connections and any broadband communication channel. Gilat Communications is on the World Wide Web at www.gilat.net

                 GILAT COMMUNICATIONS LTD.
                 (An Israeli Corporation)
           CONDENSED CONSOLIDATED BALANCE SHEET
                     AT June 30, 1999

                                       June 30      December 31,
                                          1999     1998      1998
                                   --------------   -----------
                                     (Unaudited)      (Audited)
                                      --------------------------
                                          U.S. $ in thousands
                                      --------------------------
           A s s e t s

CURRENT ASSETS:
   Cash and cash equivalents             5,592    3,334    5,151
   Short-term bank deposits              2,025             1,776
   Current maturity of long term bank deposit    10,342   10,034
   Accounts receivable:
     Trade:
  Related parties                        5,123      257    2,300
  Other                                 13,223    7,565   11,776
     Other                               2,442    1,428    1,655
   Inventories                           2,871    1,138    1,070
                                        ------- -------- -------
  T o t a l current assets              31,276   24,064   33,762
                                        -------  ------- --------
INVESTMENTS IN ASSOCIATED COMPANIES        134      149      206
                                        -------  ------- --------

PROPERTY, PLANT AND EQUIPMENT:
   Cost                                 20,058   14,889   16,647
   L e s s - accumulated depreciation    4,285    2,383    2,994
                                        -------  ------- --------
                                        15,773   12,506   13,653
                                        -------  ------- --------
GOODWILL, net of accumulated amortization4,953    1,112    1,093
                                        -------  ------- --------
                                        52,136   37,831   48,714
                                        =======  ======= ========

                                         June       December 31,
                                     1999     1998      1998
                                    ---------------    ---------
                                       (Unaudited)    (Audited)
                                       -------------------------
                                          U.S. $ in thousands
                                       -------------------------
     Liabilities and shareholders' equity

CURRENT LIABILITIES:
   Short-term bank credit                 2,502    1,526   6,210
   Current maturities of long-term debt   1,548    1,006   1,240
   Accounts payable and accruals:
     Trade:
  Related parties                         2,297              990
  Other                                   2,909    1,722   2,926
     Other                                3,981    2,009   2,807
                                         ------- ------- -------
  T o t a l current liabilities          13,237    6,263  14,173
                                         -------  ------- -------

LONG-TERM DEBT, net of current maturities 4,475    3,619   3,007

ACCRUED SEVERANCE PAY, net of amounts funded410      304     297

DEFERRED INCOME TAXES                       120       83     106
                                          ------- ------- ------
  T o t a l liabilities                  18,242   10,269  17,583
                                        -------  ------- -------

SHAREHOLDERS' EQUITY:
   Share capital                             26       26      26
   Capital surplus                       21,708   21,703  21,706
   Accomulated other comprehensive income -
  Currency translation adjustments           39       11      39
   Retained earnings                     12,121    5,822   9,360
                                        -------  ------- -------
 T o t a l shareholders' equity          33,894   27,562  31,131
                                         -------  ------- -------
                                         52,136   37,831  48,714
                                         =======  ======= =======

                 GILAT COMMUNICATIONS LTD.
                 (An Israeli Corporation)
           CONDENSED CONSOLIDATED STATEMENTS OF INCOME
     FOR THE SIX AND THREE MONTH PERIODS ENDED JUNE 30, 1999

                        Six months      Three months     Year
                          ended            ended       ended
                         June 30          June 30   December 31,
                      1999     1998    1999    1998    1998
                      ------ -------- ------ ------- ----------
                        (Unaudited)     (Unaudited)  (Audited)
                     U.S. $ in thousands (except per share data)
                     -------------------------------------------

REVENUES               15,273  9,145    8,417   5,002   23,562
COST OF REVENUES        8,257  5,027    4,649   2,754   12,718
                      -------  ------- ------  ------   -------
GROSS PROFIT            7,016  4,118    3,768   2,248   10,844
RESEARCH AND DEVELOPMENT EXPENSES
    - net                 922    750      472     389    1,585
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 3,302  1,929    1,767   1,026    4,287
                      ------- ------  -------   ------  ------
OPERATING INCOME        2,792  1,439    1,529     833    4,972
FINANCIAL INCOME  - net    98    283        1     141      399
OTHER EXPENSES - net                                        (4)
                      ------- ------- -------  -------   ------
INCOME BEFORE TAXES
 ON INCOME              2,890  1,722    1,530     974    5,367
TAXES ON INCOME           104    170       21      (2)     348
                      -------  ------  ------   -------   -----
INCOME BEFORE SHARE IN PROFITS
 (LOSSES) OF THE ASSOCIATED
 COMPANIES              2,786  1,552    1,509     976    5,019
SHARE IN PROFITS (LOSSES) OF THE
  ASSOCIATED COMPANIES    (25)    72      (31)     26      143
                      -------  ------- -------- -----   -------
NET INCOME FOR THE
 PERIOD                  2,761  1,624    1,478   1,002    5,162
                     ========  ======= =======  ======  =======
EARNINGS PER SHARE:
 Basic                  $0.30  $0.18    $0.16   $0.11    $0.56
                     ======== ======= ======== =======  =======
 Diluted                $0.29  $0.17    $0.16   $0.11    $0.55
                     ======== ======= =======  ======= ========