Gilat Satellite Networks Announces Revenues and Gross Margin Substantially in Line with Guidance and Provides Information on Second Quarter Non-Operating Financial Results

Business Wire, July 11, 2001

Business Editors

PETAH TIKVA, Israel--(BUSINESS WIRE)--July 11, 2001

Gilat Satellite Networks Ltd. (Nasdaq: GILTF), a worldwide leader in satellite networking technology, today announced revenue and gross margin substantially in line with guidance and provided information on its non-operating financial results for the quarter ending June 30, 2001.

The Company reported that its revenues and gross margin are expected to approximate previously announced guidance. Operating income is expected to be US$3 to $5 million. The Company will record non-operating expenses that include: a) financial expenses; b) share in losses of associated companies; c) expenses associated with the acceleration of long-term receivable payment; and d) a one-time charge related to the impairment of investments in other companies. After these charges of US$15 to $18 million, Gilat expects to report a loss of US$10 to $15 million, or approximately US$0.42 to $0.63 cents per share.

Gilat Chairman and CEO Yoel Gat stated, "We are pleased that the strong efforts of the Company to meet our projected revenue target, despite the difficult economic environment, resulted in revenues substantially in line with announced projections. The success was the result of traditional cross-company efforts to meet core business sales projections and the Company's confidence in its core market. Revenues were close to projected targets despite the fact that the financial state of StarBand during the quarter did not allow for any substantial consumer sales to StarBand. With the resolution of the StarBand financing announced separately today, we see strong growth prospects in consumer sales for Gilat moving forward. Certain one time items will affect EPS as announced, but will serve the Company's growth prospects especially in light of better than expected cash reserves."

About Gilat Satellite Networks Ltd.

Gilat Satellite Networks Ltd., with its global subsidiaries Spacenet Inc., Gilat Europe and Gilat Latin America, is a leading provider of telecommunications solutions based on VSAT satellite network technology. The Company provides satellite-based, end-to-end enterprise networking and rural telephony solutions to customers across six continents, and markets interactive broadband data services. Gilat is a joint venture partner, with Microsoft Corp., EchoStar Communications Corp. and ING Furman Selz Investments, in StarBand Communications Inc., America's first consumer, nationwide, two-way, high-speed satellite Internet service provider. StarBand is based in McLean, Va. SkyBlaster(TM), Skystar Advantage(R), DialAw@y IP(TM) and FaraWay(TM) are trademarks or registered trademarks of Gilat Satellite Networks Ltd. or its subsidiaries. Visit Gilat at www.gilat.com and StarBand at www.starband.com.

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.