6-K

FORM 6 – K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report on Foreign Issuer

Pursuant to Rule 13a – 16 or 15d -16
of the Securities Exchange Act of 1934

For the Month of August 2003

Gilat Satellite Networks Ltd.
(Translation of Registrant’s Name into English)

Gilat House, Yegia Kapayim Street
Daniv Park, Kiryat Arye, Petah Tikva, Israel
(Address of Principal Corporate Offices)

  Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F x Form 40-F o

  Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No x

  If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

  Attached hereto is Registrant’s press release dated August 14, 2003, announcing its second quarter results, and deal flow during the first half of the year.

  This Report on Form 6-K is hereby incorporated by reference in the Registration Statements on Form F-3 of Gilat Satellite Networks Ltd. (022-38667), Form F-3 of Gilat Satellite Networks Ltd. (No. 333-12242) and Form S-8 of Gilat Satellite Networks Ltd. (No. 333-96630), (No. 333-08826), (No. 333-10092), (No. 333-12466) and (No. 333-12988).

Signature

  Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Gilat Satellite Networks Ltd.
(Registrant)

BY: /S/ Yoav Leibovitch
——————————————
Yoav Leibovitch
Chief Financial Officer

      Dated: August 14, 2003

Aug 14, 2003

Gilat announces 2003 second-quarter results

Reports quarterly revenues of US$52 Million
Company streamlines organization and improves cost efficiency

Solid deal flow during first half of year

Petah Tikva, Israel, August 14, 2003 – Gilat Satellite Networks Ltd. (Nasdaq: GILTF), a worldwide leader in satellite networking technology, today reported its results for the quarter ended June 30, 2003.

Revenues were US$52.1 million for the second quarter of 2003, an increase of US$0.5 million over the US$51.6 million result for the same period in 2002, as well as an increase of US$1.0 million over the US$51.1 in the first quarter of 2003. Operating loss for the second quarter was US$31.5 million and net loss was US$36.2 million or US$2.79 per share. The results above include a total of US$21 million in write-offs associated with Statement of Accounting Standard #144 “Accounting for the Impairment or Disposal of Lived Assets” — SFAS #144, (US$18.9 million), and charges relating to the company’s restructuring process (US$2.1 million). The total cash and cash equivalents during the quarter decreased by US$2.5 million leaving the Company with a stable cash position.

During the quarter, a new management team and Board of Directors was elected, headed by Shlomo Rodav as the new Chairman of the Board, and Oren Most as the new President and CEO. With the Company’s financial restructuring process successfully completed, Gilat also embarked on an effort to streamline the Company’s operations in order to increase efficiency and reduce costs. This effort included a variety of measures including organizational and structural changes and office consolidation leading to increased efficiency as well as a reduction in the worldwide workforce by 13%, significantly reducing the company’s labor costs by 30%.

Management is optimistic that the combination of the new strategy it is currently finalizing and putting into place, as well as the steps taken to streamline the Company’s cost structure and improve operations, together with leveraging Gilat’s strong technology and competitive position in the global marketplace, will lead to improved economies and strengthen the Company’s position as one of the industry leaders.

Second Quarter Events
Gilat announces Alcatel subsidiaries join SATLYNX, R&D agreement with SES Global, a major agreement in Bulgaria, an important deployment in Australia and a continued strong deal flow for its Spacenet subsidiary

During the quarter, the Company announced a series of agreements that contributed to the Company’s continued strong deal flow and demonstrated the growing confidence in the Company and in its technology.

  • In June, Gilat and SES Global, the joint founding shareholders of SATLYNX, Europe’s premier 2-way satellite broadband services provider, announced that Alcatel Space and SkyBridge LP, subsidiaries of Alcatel, have joined the company and made an investment which will yield up to a 17.9% stake in the venture.

  • Separately, SES and Gilat also executed an agreement to fund the development of a low cost, Ka-band version of Gilat’s popular Skystar 360E family product line.

  • Also in Europe, Gilat signed an important agreement with the Bulgarian company TRANSAT to deploy a Skystar 360E hub and VSAT network with sites throughout Bulgaria. The network will provide data connectivity to 450 gas stations, 17 corporate regional branches, 30 bank branches and other applications.

  • Australia’s major telecom Optus, was hired to run an IDL network for the Australian government initiative to deliver education to small rural towns, isolated schools, and remote homesteads in New South Wales and the Northern Territory, using Gilat’s Skystar 360E VSAT platform. Gilat is providing a 310-site, two-way satellite communications network to deliver broadband Internet services to these rural communities, plus 540 more VSATs to Australia’s world renowned ‘School of the Air’.

Spacenet Continues Strong Deal Flow

  • Gilat’s subsidiary, Spacenet, has been awarded a five-year contract by Rent-Way, Inc. to provide a two-way satellite-based IP network to all of Rent-Way’s 750+ stores. Rent-Way is one of the nation’s largest operators of rental-purchase stores. Rent-Way’s Connexstar Enterprise network is designed to support a wide variety of services, including point-of-sale and inventory control applications, as well as Internet and intranet access.

  • Spacenet has been selected by RTM Restaurant Group Inc. to provide a broadband VSAT network to their Arby’s restaurants and other quick service restaurant locations. The five-year commitment calls for Spacenet’s Connexstar Enterprise service to be deployed at 825 restaurant locations for a range of applications including credit authorization, point-of-sale and store polling as well as intranet-based back office applications.

  • Spacenet signed an agreement with The Kroger Co. to provide remote VSAT and base-band hub technology for a nationwide two-way satellite network. The network will initially link multiple video studios with Fred Meyer grocery store locations through a broadband connection allowing high-speed Video on Demand (VoD) delivery and Voice over IP (VoIP) return for Interactive Distance Learning (IDL) and videoconferencing applications.

  • Spacenet has been chosen by Golden Corral Corporation to deploy the Connexstar CX-500 commercial-grade, broadband satellite service to its chain of Golden Corral family restaurants. This service will be used by Golden Corral to run a broad range of IP-based applications including high-speed credit authorization, point-of-sale polling and web-based, back-office applications.

  • Spacenet has signed an agreement with leading auto parts retailer Genuine Parts Company (GPC) to provide a high-speed satellite communications network for its NAPA auto parts retail stores. GPC’s network will utilize Connexstar Enterprise, a new variant of Spacenet’s popular Connexstar service. The agreement calls for Spacenet’s VSAT service to be deployed at a minimum of 750 of GPC’s more than 5,000 locations.

  • Spacenet has also been selected by International Dairy Queen, Inc. as its exclusive provider of satellite-based broadband connectivity for its restaurant brands, including Dairy Queen/Brazier® restaurants, throughout the United States. The Connexstar service is a key component of Dairy Queen’s plans to enhance point-of-sale applications and link all franchise locations to corporate headquarters.

About Gilat Satellite Networks Ltd.
Gilat Satellite Networks Ltd., with its global subsidiaries Spacenet Inc., Gilat Latin America and rStar Corporation (RSTRC), is a leading provider of telecommunications solutions based on Very Small Aperture Terminal (VSAT) satellite network technology – with nearly 400,000 VSATs shipped worldwide. Gilat, headquartered in Petah Tikva, Israel, markets the Skystar Advantage®, DialAw@y IP™, FaraWay™, Skystar 360E™ and SkyBlaster* 360 VSAT products in more than 70 countries around the world. Gilat 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 SES GLOBAL, and Alcatel Space and SkyBridge LP, subsidiaries of Alcatel, in SATLYNX, a provider of two-way satellite broadband services in Europe. Skystar Advantage, Skystar 360E, DialAw@y IP and FaraWay are trademarks or registered trademarks of Gilat Satellite Networks Ltd. or its subsidiaries. Visit Gilat at www.gilat.com. (*SkyBlaster is marketed in the United States by StarBand Communications Inc. under its own brand name.)

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.

Investor Inquiries:
Tim Perrott
Tel: +1703-848-1515

Gilat Media Contact:
Barry Spielman,
Director Corporate Marketing
tel: +(972)3-925-2201
barrys@gilat.com

Gilat Satellite Networks Ltd.
Condensed Consolidated Balance Sheet
US dollars in thousands

June 30
2003
Unaudited
 December 31
2002
Audited
ASSETS

               
CURRENT ASSETS:             
Cash and cash equivalents    44,858    48,072  
Short-term bank deposits    1,894    1,663  
Short-term restricted cash    13,659    12,151  
Restricted cash held in trustees    18,241       
Trade receivables, (net of allowance for doubtful accounts)    42,420    55,459  
Inventories    54,074    74,978  
Other accounts receivable and prepaid expenses    33,061    47,113  
Total current assets     208,207    239,436  
LONG-TERM INVESTMENTS AND RECEIVABLES:            
Long-term restricted cash    9,411    10,733  
Severance pay fund    9,260    7,664  
Long-term trade receivables and other receivables, net    43,973    32,427  
     62,644    50,824  
PROPERTY AND EQUIPMENT, NET     143,701    162,905  
INTANGIBLE ASSETS AND DEFERRED CHARGES, NET     10,458    21,049  
Total assets     425,010    474,214  
 
June 30
2003
Unaudited
 December 31
2002
Audited
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)

            
CURRENT LIABILITIES:             
Short-term bank credit    332    1,826  
Current maturities of long-term loans    2,510    8,197  
Trade payables    29,178    26,507  
Accrued expenses    48,090    37,592  
Short-term advances from customer held in trustees    6,819  
Other current liabilities    38,156    37,787  
Total current liabilities     125,085    111,909  
LONG-TERM LIABILITIES:             
Accrued severance pay    9,878    8,412  
Long-term advances from customer held in trustees    11,815       
Long-term loans, net of current maturities    115,769    145,140  
Accrued interest related to restructured debt    50,154       
Other long-term liabilities    20,298    19,193  
Convertible subordinated notes    90,529    358,648  
Total long-term liabilities     298,443    531,393  
COMMITMENTS AND CONTINGENCIES

            
MINORITY INTEREST     5,048    3,827  
SHAREHOLDERS' EQUITY (DEFICIENCY):             
Share capital - Ordinary shares of NIS 0.01 par value    570       
Additional paid in capital    671,074    617,867  
Accumulated other comprehensive loss    -6,607    -8,165  
Accumulated deficit    -668,603    -782,617  
Total shareholders' equity (deficiency)      -3,566     -172,915  
Total liabilities and shareholders' equity (deficiency)      425,010     474,214  

Gilat Satellite Networks Ltd.
Condensed Consolidated Income (Loss) Statements
US dollars in thousands

Six months ended
June 30
 Three months ended
June 30
2003
 2002
 2003
 2002
Unaudited
 Unaudited
Revenues      103,205    123,659    52,103    51,612  
Cost of Revenues    81,955    86,061    39,347    36,069  
Inventory write off    3,185         0       
Gross profit       18,065     37,598     12,756     15,543  
Research and development costs:                       
     Expenses incurred    12,035    14,989    6,051    7,631  
     Less - grants    2,010    2,012    982    728  
     10,025    12,977    5,069    6,903  
     Selling, general and administrative expenses    37,014    39,956    17,997    19,593  
     Provision for doutfull accounts    1,659    12,610    140    12,000  
     Restructuring charges    2,164         2,164       
     Impairment of tangible and intangible assets    23,851         18,851       
Operating income (loss)       (56,648 )   (27,945 )   (31,465 )   (22,953 )
     Financial (income) expenses - net    3,620    9,830    720    4,962  
     Gain from restructuring of debt    -181,093                 
Income (loss) before taxes on income       120,825     (37,775 )   (32,185 )   (27,915 )
     Taxes on (income) expenses    7,952    367    2,424       
Income (loss) after taxes on income       112,873     (38,142 )   (34,609 )   (27,915 )
     Share in losses (profits) of associated companies    -2,332    10,809    68    8,067  
     Minority Share in losses of a subsidiary    1,191    -1,735    1,557    -747  
Net income (loss) from continuing operations       114,014     (47,216 )   (36,234 )   (35,235 )
Loss from discontinued operations         1,439         509  
Net income (loss)       114,014     (48,655 )   (36,234 )   (35,744 )

Earnings per share (in US dollars)     Basic       13.90     -40.37     -2.79     -30.13  
      Fully Diluted       13.17     -40.37     -2.79     -30.13  
Weighted average number of shares   
     used in computation of earnings    
    per share (in thousands)     Basic     8,204    1,169    12,988    1,169  
     Fully Diluted     8,721    1,169    12,988    1,169