Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
Large accelerated filer ☐
|
|
Non-accelerated filer ☐
|
Emerging growth company
|
☒
|
☐ |
International Financial Reporting Standards as issued by the International Accounting Standards Board
|
☐ |
Other
|
◾ |
Managed satellite network services solutions, including services over our own networks
(which may include satellite capacity); |
◾ |
Network planning and optimization; |
◾ |
Remote network operation; |
◾ |
Call center support; |
◾ |
Hub and field operations; and |
◾ |
Construction and installation of communication networks, typically on a Build, Operate
and Transfer, or BOT, or Build, Operate and Own, or BOO, contract basis. |
• |
Fixed Networks provides advanced fixed broadband
satellite communication networks, satellite communication systems and associated professional services and comprehensive turnkey solutions
(which may include in certain instances managed satellite network services). Our customers are service providers, satellite operators,
MNOs, telecommunication companies, or Telcos, and large enterprises and governments worldwide. In addition, it includes our network operation
and managed networks and services in Peru. We focus on high throughput satellites, or HTS, and very high throughput satellites, or VHTS,
and Non GEO-Stationary Orbit satellite constellation networks, or NGSOs, opportunities worldwide. Principal applications include cellular
backhaul, social inclusion solutions, government, defense and enterprise networks and drive meaningful partnerships with satellite operators
to leverage our technology and breadth of services to deploy and operate the ground-based satellite communication networks. |
• |
Mobility Solutions provides advanced on-the-move
satellite communications equipment, systems, and solutions, including airborne, maritime, gateways and ground-mobile satellite systems
and solutions. This operating segment provides solutions for land, sea and air connectivity, focusing on the high-growth IFC market, with
our unique leading technology as well as defense and homeland security activities. Our product portfolio includes a leading network platform
with high-speed VSATs, high performance on-the-move antennas and high efficiency, high power SSPAs, BUCs and transceivers. Our customers
are satellite operators, service providers, system integrators, defense and homeland security organizations, as well as other commercial
entities worldwide. |
• |
Terrestrial Infrastructure Projects provides fiber
and wireless network infrastructure construction of the Programa Nacional de Telecomunicaciones (Pronatel), or PRONATEL, in Peru.
|
• |
Satellite Networks is focused on developing and
supplying networks that are used as the platform that enables the latest satellite constellations of HTS, VHTS and NGSO opportunities
worldwide. We provide advanced broadband satellite communication networks and associated professional services and comprehensive turnkey
solutions and managed satellite network services solutions. Our customers are service providers, satellite operators, MNOs, Telcos, large
enterprises, system integrators, defense, homeland security organizations, and governments worldwide. Principal applications include In-Flight-Connectivity,
cellular backhaul, maritime, social inclusion solutions, government, defense and enterprise networks and are driving meaningful partnerships
with satellite operators to leverage our technology and breadth of services to deploy and operate the ground-based satellite communication
networks. Our product portfolio includes a leading satellite network platform with high-speed VSATs, high-performance on-the-move antennas,
BUCs, and transceivers. |
• |
Integrated Solutions is focused on developing,
manufacturing, and supplying products and solutions for mission-critical defense and broadcast satellite communications systems, advanced
on-the-move and on-the-pause satellite communications equipment, systems and solutions, including airborne, ground-mobile satellite systems
and solutions. The integrated solutions product portfolio comprises of leading high-efficiency, high-power SSPAs, BUCs and transceivers
with a field-proven, high-performance variety of frequency bands. Our customers are satellite operators, In-Flight Connectivity service
providers, defense and homeland security system integrators, and NGSO gateway integrators. |
• |
Network Infrastructure and Services is focused
on telecom operation and implementation of large-scale network projects in Peru. We provide terrestrial (fiber optic and wireless network)
and satellite network construction and operation. We serve our customers through technology integration, managed networks and services,
connectivity services, internet access and telephony over our own networks. We implement projects using various technologies (including
our equipment), mainly based on BOT and BOO contracts. |
|
1 | |
1 | ||
1 | ||
1 |
A. |
Reserved |
1 |
B. |
Capitalization and Indebtedness |
1 |
C. |
Reasons for the Offer and Use of Proceeds |
1 |
D. |
Risk Factors |
1 |
24 |
A. |
History and Development of the Company |
24 |
B. |
Business Overview |
25 |
C. |
Organizational Structure |
42 |
D. |
Property, Plants and Equipment |
42 |
43 | ||
43 |
A. |
Operating Results |
43 |
B. |
Liquidity and Capital Resources |
51 |
C. |
Research and Development |
53 |
D. |
Trend Information |
54 |
E. |
Critical Accounting Estimates |
56 |
ITEM 6: |
60 |
A. |
Directors and Senior Management |
60 |
B. |
Compensation of Directors and Officers |
64 |
C. |
Board Practices |
67 |
D. |
Employees |
75 |
E. |
Share Ownership |
76 |
ITEM 7: |
77 |
A. |
Major Shareholders |
77 |
B. |
Related Party Transactions |
79 |
C. |
Interests of Experts and Counsel |
79 |
ITEM 8: | 79 | |
ITEM 9: | 81 |
A. |
Offer and Listing Details |
81 |
B. |
Plan of Distribution |
81 |
C. |
Markets |
81 |
D. |
Selling Shareholders |
81 |
E. |
Dilution |
81 |
F. |
Expense of the Issue |
81 |
ITEM 10: | 81 |
A. |
Share Capital |
81 |
B. |
Memorandum and Articles of Association |
82 |
C. |
Material Contracts |
82 |
D. |
Exchange Controls |
83 |
E. |
Taxation |
83 |
F. |
Dividend and Paying Agents |
92 |
G. |
Statement by Experts |
92 |
H. |
Documents on Display |
92 |
I. |
Subsidiary Information |
93 |
ITEM 11: | 93 | |
ITEM 12: | 94 |
94 | ||
ITEM 13: | 94 | |
ITEM 14: | 94 | |
ITEM 15: | 94 | |
ITEM 16: |
95 | |
ITEM 16A: | 95 | |
ITEM 16B: | 96 | |
ITEM 16C: | 96 | |
ITEM 16D. | 97 | |
ITEM 16E: | 97 | |
ITEM 16F: | 97 | |
ITEM 16G. | 97 | |
ITEM 16H. | 97 | |
ITEM 16I. | 97 | |
98 | ||
ITEM 17: |
98 | |
ITEM 18: | 98 | |
ITEM 19: | 98 | |
101 |
ITEM 1: |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS |
ITEM 2: |
OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3: |
KEY INFORMATION |
A. |
Reserved |
B. |
Capitalization and Indebtedness |
C. |
Reasons for the Offer and Use of Proceeds |
D. |
Risk Factors |
• |
A significant portion
of our revenue in 2022 was attributable to a limited number of customers. |
• |
A failure to deliver
upon our large-scale projects in an economical and a timely manner, or a delay in collection of payments due to us in connection with
any such large-scale project could have a significant adverse impact on our operating results. |
• |
The continuing effects
of the COVID-19 pandemic are highly unpredictable and could be significant, and the duration and extent to which this will impact
our future results of operations and overall financial performance remains uncertain. |
• |
In the past, we incurred
major losses and we may not be able to continue to operate profitably in the future. |
• |
Our available cash balance
may decrease in the future if we cannot generate cash from operations. |
• |
If the satellite communications
markets fail to grow, our business could be materially harmed. |
• |
Because we compete for
largescale contracts in competitive bidding processes, losing a small number of bids or a decrease in the revenues generated from our
large-scale projects could have a significant adverse impact on our operating results. |
• |
A large portion of our
large-scale contracts are with governments or large governmental agencies in Latin America and any volatility in the political or economic
climate or any unexpected unilateral termination, or suspension of payments could have a significant adverse impact on our business.
|
• |
Actual
results could materially differ from the estimates and assumptions
that we use to prepare our financial statements. |
• |
Tax authorities may disagree
with our provisions and payments related to income taxes, deduction of withholding taxes, intercompany charges, cross-jurisdictional transfer
pricing or other matters which could result in our being assessed additional taxes.
|
• |
Our insurance coverage
may not be sufficient for every aspect or risk related to our business. |
• |
We operate in the highly
competitive industry and may be unsuccessful in competing effectively in the future. |
• |
Our lengthy sales cycles
could harm our results of operations if forecasted sales are delayed or do not occur. |
• |
We may enter into acquisition agreements,
and such acquisitions, could be difficult to integrate, disrupt our business and dilute shareholder value. |
• |
If we are
unable to competitively operate within the network communications market and respond to new technologies, our business could be adversely
affected. |
• |
If we are unable to
competitively operate within the GEO, HTS/VHTS, and NGSO satellite environments, our business could be adversely affected. |
• |
We
are dependent upon a limited number of suppliers for key components that
are incorporated in our products, and
may be significantly harmed if we are unable to obtain
such components on favorable terms or on a timely basis.
We are also affected by global supply chain disruptions and price increases and may be affected by the military situation in Ukraine.
|
• |
We are dependent upon
a limited number of suppliers of space segment, or transponder capacity and may be significantly harmed if we are unable to obtain the
space segment for the provision of services on favorable terms or on a timely basis. |
• |
Our failure to obtain
or maintain authorizations under the U.S. export control and trade sanctions laws and export regulations and restrictions or Israel’s
enhanced export control regulations could have a material adverse effect on our business. |
• |
We are dependent on
our management team, especially managers of our large entities around the world, as well as on our key employees, and the loss of one
or more of them could harm our business and prevent us from implementing our business plan in a timely manner. |
• |
We may be unable to
adequately protect our proprietary rights, which may limit our ability to compete effectively. |
• |
Failure to protect against
cyber-attacks, natural disasters or terrorist attacks, and failures of our information technology systems, infrastructure and data could
have an adverse effect on our business. |
• |
Our international sales
and business expose us to changes in foreign regulations and tariffs, tax exposures, inflation, political instability and other risks
inherent to international business, any of which could adversely affect our operations. |
• |
Unfavorable global and
regional economic, political and health conditions could adversely affect our business, financial condition or results of operations.
|
• |
Increasing scrutiny
and changing expectations from investors, lenders, customers and other market participants with respect to our Environmental, Social and
Governance, or ESG, policies may impose additional costs on us or expose us to additional risks. |
• |
We may face difficulties
in obtaining regulatory approvals for our telecommunication services and products, which could adversely affect our operations.
|
• |
Currency exchange rates
and fluctuations of currency exchange rates may adversely affect our results of operations, liabilities, and assets. |
• |
We may be subject to
claims by third parties alleging that we infringe intellectual property owned by them. We may be required to commence litigation to protect
our intellectual property rights. Any intellectual property litigation may continue for an extended period and may materially adversely
affect our business, financial condition and operating results. |
• |
Potential liability
claims relating to our products or services could have a material adverse effect on our business. |
• |
Environmental laws and
regulations may subject us to significant liability. |
• |
We
may suffer from a short-term decrease in our revenues due to customers shifting to our SkyEdge IV next
generation system. |
• |
We
identified material weaknesses in our internal control over financial reporting as of December 31, 2021, which we believe have been remediated
in the year ended in December 31, 2022. If we experience material weaknesses or other deficiencies in the future or otherwise fail to
maintain an effective system of internal controls, we may not be able to accurately and timely report our financial results, which could
cause shareholders to lose confidence in our financial and other public reporting, and adversely affect our share price.
|
• |
If
we are unable to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act
of 2002, the reliability of our financial statements may be questioned and our share price may suffer.
|
• |
Our share price has
been highly volatile and may continue to be volatile and decline. |
• |
Our operating results
may vary significantly from quarter to quarter and from year to year and these quarterly and yearly variations in operating results, as
well as other factors, may contribute to the volatility of the market price of our shares. |
• |
We
may in the future be classified as a passive foreign investment company, or PFIC, which would subject our U.S. investors to adverse tax
rules. |
• |
Future sales of our
ordinary shares and the future exercise of options may cause the market price of our ordinary shares to decline and may result in a substantial
dilution. |
• |
Certain of our shareholders beneficially
own a substantial percentage of our ordinary shares. |
• |
No assurance can be
given that we will distribute dividends in the future. |
• |
Our ordinary shares
are traded on more than one market and this may result in price variations. |
• |
Political and economic
conditions in Israel may limit our ability to produce and sell our products. This could have a material adverse effect on our operations
and business condition, harm our results of operations and adversely affect our share price. |
• |
Your
rights and responsibilities as a shareholder are governed by Israeli law and differ in some respects from those under Delaware law.
|
• |
As a foreign private
issuer whose shares are listed on the NASDAQ Global Select Market, we follow certain home country corporate governance practices instead
of certain NASDAQ requirements, which may not afford shareholders with the same protections that shareholders of domestic companies have.
|
• |
Our results of operations
may be negatively affected by the obligation of our personnel to perform military service. |
• |
You may not be able
to enforce civil liabilities in the U.S. against our officers and directors. |
• |
Under current Israeli
law, U.S. law and the laws of other jurisdictions, we may not be able to enforce covenants not to compete and therefore may be unable
to prevent our competitors from benefiting from the expertise of some of our former employees. |
• |
issuance of equity securities as consideration for acquisitions
that would dilute our current shareholders’ percentages of ownership; |
• |
significant
acquisition costs; |
• |
decrease
of our cash balance; |
• |
the incurrence of debt and contingent liabilities; |
• |
difficulties in the assimilation and integration of operations,
personnel, technologies, products and information systems of the acquired companies; |
• |
diversion of management’s attention from other business
concerns; |
• |
contractual disputes; |
• |
risks of entering geographic and business markets in which
we have no or only limited prior experience; |
• |
potential loss of key employees of acquired organizations or
loss of customers; |
• |
the possibility that business cultures will not be compatible;
|
• |
the difficulty of incorporating acquired technology and rights
into our products and services; |
• |
unanticipated expenses related to integration of the acquired
companies; and |
• |
difficulties in implementing and maintaining uniform standards,
controls and policies. |
• |
imposition of governmental controls, regulations and taxation
which might include a government’s decision to raise import tariffs or license fees in countries in which we do business;
|
• |
government regulations that may prevent us from choosing our
business partners or restrict our activities; |
• |
the U.S. Foreign Corrupt Practices Act, or the FCPA, and applicable
anti-corruption laws in other jurisdictions, which include anti-bribery provisions. Our policies mandate compliance with these laws. Nevertheless,
we may not always be protected in cases of violation of the FCPA or other applicable anti-corruption laws by our employees or third-parties
acting on our behalf. A violation of anti-corruption laws by our employees or third-parties during the performance of their obligations
for us may have a material adverse effect on our reputation, operating results and financial condition; |
• |
tax exposures in various jurisdictions relating to our activities
throughout the world; |
• |
political and/or economic instability in countries in which
we do or desire to do business or where we operate or manufacture our products. Such unexpected changes could have an adverse effect on
the gross margin of some of our projects. This includes similar risks from potential or current political and economic instability as
well as volatility of foreign currencies in countries such as Peru, Colombia, Brazil, Russia, Ukraine, certain countries in Eastern Europe
and East Asia and other countries in which we will conduct business in the future; |
• |
difficulties in staffing and managing foreign operations that
might mandate employing staff in various countries to manage foreign operations. This requirement could have an adverse effect on the
profitability of certain projects; |
• |
adverse economic conditions and general uncertainty about economic
recovery or growth, including recession, depression and inflation concerns; |
• |
longer payment cycles and difficulties in collecting accounts
receivable; |
• |
foreign exchange risks due to fluctuations in local currencies
relative to the dollar; and |
• |
relevant zoning ordinances that may restrict the installation
of satellite antennas and might also reduce market demand for our service. Additionally, authorities may increase regulation regarding
the potential radiation hazard posed by transmitting earth station satellite antennas’ emissions of radio frequency energy that
may negatively impact our business plan and revenues. |
• |
rising inflation may put upward pressure on interest rates,
increase our exposure to currency exchange risks and cause an increase in our expenses, mainly related to costs of supplies and human
resources, which could in turn adversely affect our business. |
• |
A significant
portion of our expenses, principally salaries and related personnel expenses, are incurred in NIS, and
to a lesser extent, other non-U.S. dollar currencies, whereas the currency we use to report our financial
results is the U.S. dollar and a significant portion of our revenue is generated in U.S. dollars. During 2022 and 2021, we witnessed a
general trend of revaluation of the U.S. dollar against the NIS. However, during 2019 and 2020, we witnessed an opposite trend, of significant
devaluation of the U.S. dollar against the NIS. The strengthening of the NIS against the U.S. dollar can considerably increase the U.S.
dollar value of our expenses in Israel and our results of operations may be adversely affected. |
• |
A portion
of our international sales is denominated in currencies other than the U.S. dollar, including but not limited to the Euro, Australian
Dollar, Brazilian Real, Israeli Shekel, Peruvian Sol, Russian Ruble, Indian Rupee and the Mexican Peso, therefore
we are exposed to the risk of devaluation of such currencies relative to the dollar which could have a negative impact on our revenues.
|
• |
We have assets and liabilities
that are denominated in non-U.S. dollar currencies. Therefore, significant fluctuation in these other currencies could have significant
effect on our results. |
• |
A portion of our U.S. dollar revenues are derived from customers operating in local
currencies which are different from the U.S. dollar. Therefore, devaluation in the local currencies of our customers relative to the U.S.
dollar could cause our customers to cancel or decrease orders or delay payment. |
• |
the timing, size and composition of requests for proposals
or orders from customers; |
• |
the timing of introducing new products and product enhancements
by us and the level of their market acceptance; |
• |
the mix of products and services we offer; |
• |
the level of our expenses; |
• |
the changes in the competitive environment in which we operate;
and |
• |
Our ability to supply the goods ordered within the quarter.
|
• |
economic instability; |
• |
announcements of technological innovations; |
• |
customer orders or new products or contracts; |
• |
competitors’ positions in the market; |
• |
changes in financial estimates by securities analysts;
|
• |
conditions and trends in the VSAT and other technology industries
relevant to our businesses; |
• |
our earnings releases and the earnings releases of our competitors;
and |
• |
the general state of the securities markets (with particular
emphasis on the technology and Israeli sectors thereof). |
A. |
History and Development of the Company |
B. |
Business Overview |
• |
Satellite Networks
is focused on the development and supply of networks that are used as the platform that enables the latest satellite constellations of
HTS, VHTS and NGSO opportunities worldwide. We provide advanced broadband satellite communication networks and associated professional
services and comprehensive turnkey solutions and managed satellite network services solutions. Our customers are service providers, satellite
operators, MNOs, Telcos, large enterprises, system integrators, defense, homeland security organizations and governments worldwide. Principal
applications include In-Flight-Connectivity, cellular backhaul, maritime, social inclusion solutions, government, defense and enterprise
networks and are driving meaningful partnerships with satellite operators to leverage our technology and breadth of services to deploy
and operate the ground-based satellite communication networks. Our product portfolio includes a leading satellite network platform with
high-speed VSATs, high performance on-the-move antennas, BUCs and transceivers. |
• |
Integrated
Solutions is focused on the development, manufacturing and supply of products
and solutions for mission-critical defense and broadcast satellite communications systems, advanced on-the-move and on-the-pause satellite
communications equipment, systems and solutions, including airborne, ground-mobile satellite systems and solutions. The integrated solutions
product portfolio comprises of leading high-efficiency, high-power SSPAs, BUCs and transceivers with a field-proven, high-performance
variety of frequency bands. Our customers are satellite operators, In-Flight Connectivity service providers, defense and homeland security
system integrators and NGSO gateway integrators. |
• |
Network Infrastructure
and Services is focused on telecom operation and implementation of large-scale
networks projects in Peru. We provide terrestrial (fiber optic and wireless network) and satellite network construction and operation.
We serve our customers through technology integration, managed networks and services, connectivity services, internet access and telephony
over our own networks. We implement projects using various technologies (including our equipment), mainly based on BOT and BOO contracts.
|
• |
Communications satellite – Typically a satellite in geostationary orbit (synchronized
with the earth’s orbit) or NGSO. |
• |
Satellite communications ground station equipment – These are devices that
have a combination of data communications and Radio Frequency, or RF elements designed to deliver data via communication satellites. Examples
of ground station equipment are remote site terminals, such as VSATs, central hub station systems, amplifiers, BUCs and antennas.
|
• |
A VSAT is comprised of the following elements: |
o |
Modem – This is the device that modulates the digital data into an analog
RF signal for delivery to the upconverter and demodulates the analog signals from the downconverter back into digital data. The modem,
which is typically located indoors, performs data processing functions such as traffic management and prioritization and provides the
digital interfaces (Ethernet port/s) for connecting to the user’s equipment (PC, switch, etc.). |
o |
Amplifiers and BUCs – These are the components that connect the ground station
equipment with the antenna. The purpose of the amplifiers and BUCs is to amplify the power and convert the frequency of the transmitted
RF signal. |
o |
Antenna – Antennas can vary quite significantly in size, power and complexity
depending on the ground equipment they are connected to, and their application. For example, antennas connected to remote sites generally
are in the range of one meter in diameter while those connected to the central hub system can be in the range of ten meters in diameter.
Antennas used on moving platforms need to be compact and have a mechanically or electronically auto-pointing mechanism so that they can
remain locked onto the satellite during motion. |
• |
Universal
availability – Satellite communications provide service to any location
within a satellite footprint. |
• |
Timely implementation
– Large satellite communications networks with thousands of remote
sites can be deployed within a few weeks. |
• |
Broadcast
and multicast capabilities – Satellite is an optimal solution for
broadcast and multicast transmission as the satellite signal is simultaneously received by any group of users in the satellite footprint.
|
• |
Reliability
and service availability – Satellite communications network availability
is high due to the satellite and ground equipment reliability, the small number of components in the network and terrestrial infrastructure
independence. |
• |
Scalability
– Satellite communications networks scale easily from a single site
to thousands of locations. |
• |
Cost-effectiveness
– The cost of satellite communications networks is independent of
distance and therefore it is a cost-effective solution for networks comprised of multiple sites in remote locations. |
• |
Applications
delivery – Satellite communications networks offer a wide variety
of customer applications such as e‑mail, virtual private networks, video, voice, internet access, distance learning, cellular backhaul
and financial transactions. |
• |
Portability
and Mobility – Satellite communications solutions can be mounted on
moving platforms for communications on the move, or deployed rapidly for communications in fixed locations and then relocated or moved
as required. |
• |
Project management
– accompanying the customer through all stages of a project and ensuring that the project objectives are within the predefined scope,
time and budget; |
• |
Satellite
network design – translating the customer’s requirements into
a system to be deployed, performing the sizing and dimensioning of the system and evaluating the available solutions; |
• |
Deployment
logistics – transportation and rapid installation of equipment in
all of the network sites; |
• |
Implementation
and integration – combining our equipment with third party equipment
such as solar panel systems and surveillance systems as well as developing tools to allow the customer to monitor and control the system;
|
• |
Operational
services – providing professional services, program management, network
operations and field services; and |
• |
Maintenance
and support – providing 24/7 helpdesk services, on-site technician
support and equipment repairs and updates. |
• |
Space segment
- where applicable, providing space capacity with back to back agreements with the satellite operators. |
• |
Outsourced operations such as VSAT installation, service commissioning and hub operations;
|
• |
Proactive troubleshooting, such as periodic network analysis, to identify symptoms
in advance; and |
• |
Training and certification to ensure customers and local installers are proficient
in VSAT operation. |
• |
a single accountable partner for all of their satellite communication network needs; |
• |
high credibility and experience; |
• |
local presence and partnerships; |
• |
industry-leading technology and system integration; |
• |
flexibility and customization; and |
• |
proven ability to deliver innovative end-to-end solutions. |
• |
In-Flight Connectivity and UAS – Single and Dual Band solutions for commercial,
business and military aviation including panel based high efficiency antennas. In early 2022, we successfully demonstrated with Airbus
a flat ESA antenna with no moving parts. |
• |
Train Data Connectivity – Reliable and wide band alternative to cellular based
data connectivity for trains over satellite supporting high-speed trains. Provides access in remote and rural places with smooth coverage
and cross-country access with no roaming limitation; |
• |
Military - strategic military advantage by supporting the transfer of real-time
intelligence while on-the-move with a small, low profile, hard to track antenna; |
• |
Digital satellite news gathering – always on, no set up time, real-time streaming
video; First responders - supports vehicles’ mobility, agility and stability required for teams to be the first to reach the scene; and |
• |
Search and exploration teams, close-to-shore vessels etc. |
• |
RaySat ER7000
maximizes throughput using high-efficiency waveguide panel technology and the antenna’s light weight ensures easy and safe vehicle
mounting. It has been widely deployed on trains and large vehicles worldwide. |
• |
Electronically-Steered-Array,
Phased-Array Antenna (ESA/PAA) (Ka, Ku) is an ultra-slim (low-profile) antenna
with no moving parts that electronically steers the transmission and reception beams towards the satellite, allowing operation even around
the equator. The antenna design is highly scalable, with array dimensions that can be changed to optimally match specific gain requirements,
making it suitable for a wide range of mobile platforms (aerial, land and maritime) and various throughput performance needs. Owing to
its scalability and ultra-low profile, the antenna is particularly suited to supporting mobile connectivity for platforms that are constrained
by size and weight. |
• |
Other Antennas that are currently supported are RaySat’s SR300; BRP 60; BR
71/72 and ER5000. SR 300 and ER 5000 are COTM antennas that are used for commercial defense and government applications. BRP 60 and BR71/72
are used for UAS applications. |
• |
Defense Communications - satellite-based airborne and highly secured point-to-point.
This market is typically categorized by customers requiring high quality products – at times for mission critical communications
in extreme environmental conditions. The satellite terminals (e.g., VSAT, Single Channel Per Carrier,
or SCPC) are usually provided to the defense agencies via system integrators and not directly from the power amplifier suppliers.
|
• |
Government - public safety, emergency response and disaster recovery. Similar to
the market for defense agencies, though usually less demanding in terms of environmental conditions, these terminals are provided to various
local, state and federal agencies that need to manage. emergency communications. The satellite terminals (e.g., VSAT, SCPC) are usually
provided via system integrators or service providers and not directly from the power amplifier suppliers. |
• |
Commercial terminals - A high power amplifier is used with high-end VSAT terminals
for various applications where there is the requirement to transmit large amounts of data. Examples include airborne IFC terminals/antennas
in commercial and business airplanes, high speed for internet access, NGSO satellite constellations and gateway opportunities. The satellite
terminals/antennas are usually provided via system integrators, service providers or airframe manufacturers and not directly from the
power amplifier suppliers. |
Years Ended December 31,
|
||||||||||||
2022 |
2021 |
2020 |
||||||||||
U.S. |
40 |
% |
34 |
% |
36 |
% | ||||||
Peru |
24 |
% |
23 |
% |
27 |
% | ||||||
Israel |
1 |
% |
3 |
% |
2 |
% | ||||||
Other |
35 |
% |
40 |
% |
35 |
% | ||||||
Total |
100 |
% |
100 |
% |
100 |
% |
C. |
Organizational Structure |
Significant Subsidiaries
|
Country/State
of Incorporation
|
% Ownership |
1. Gilat Satellite Networks (Holland) B.V. | Netherlands
|
100%
|
2. Wavestream Corporation | Delaware (U.S.) | 100%
|
3. Gilat Networks Peru S.A | Peru | 100%
|
4. Gilat to Home Peru S.A | Peru | 100%
|
5. Gilat Satellite Networks (Mexico) S.A. de C.V. | Mexico |
100%
|
6. Wavestream Corporation (Asia) Pte. Ltd. |
Singapore |
100%
|
7. Gilat do Brazil Ltda. |
Brazil |
100%
|
8. Gilat Satellite Networks Australia Pty Ltd. |
Australia |
100%
|
9. Gilat Satellite Networks (Eurasia) Limited |
Russia |
100%
|
10. Gilat Satellite Networks MDC (Moldova) |
Moldova |
100%
|
11. Raysat Bulgaria EOOD |
Bulgaria |
100%
|
12. Gilat Satellite Communication Technology (Beijing) Ltd.
|
China |
100%
|
13. Gilat Satellite Networks (Philippines) Inc. |
Philippines |
100%
|
D. |
Property, Plants and Equipment |
ITEM 4A: |
UNRESOLVED STAFF COMMENTS |
ITEM 5: |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
A. |
Operating Results |
Year Ended |
Year Ended |
|||||||||||||||||||
December 31, |
December 31, |
|||||||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
||||||||||||||||
|
U.S. dollars in thousands
|
Percentage change
|
Percentage of revenues
|
|||||||||||||||||
|
||||||||||||||||||||
Satellite Networks |
120,381 |
115,408 |
4 |
% |
50 |
% |
54 |
% | ||||||||||||
Integrated Solutions |
61,376 |
50,054 |
23 |
% |
26 |
% |
23 |
% | ||||||||||||
Network Infrastructure & Services |
58,083 |
49,508 |
17 |
% |
24 |
% |
23 |
% | ||||||||||||
Total |
239,840 |
214,970 |
12 |
% |
100 |
% |
100 |
% |
|
Year Ended |
Year Ended |
||||||||||||||
|
December 31, |
December 31, |
||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
||||||||||||
U.S. dollars in thousands
|
Percentage of revenues
|
|||||||||||||||
Satellite Networks |
56,918 |
50,800 |
47 |
% |
44 |
% | ||||||||||
Integrated Solutions |
17,634 |
16,625 |
29 |
% |
33 |
% | ||||||||||
Network Infrastructure & Services
|
12,356 |
3,842 |
21 |
% |
8 |
% | ||||||||||
Total |
86,908 |
71,267 |
36 |
% |
33 |
% |
• |
The increase in the Satellite Network operating segment is
attributable to a favorable deal mix as well as increase in revenue volume especially from IFC market customers. |
• |
The decrease in the Integrated Solutions operating segment
is attributable to a less favorable deal mix and the non-recurrence of Covid-19 grants received in 2021, partially offset by higher revenue
volume. |
• |
The increase
in the Network Infrastructure and Services operating segment is
primarily attributable to higher portion of operation revenues. |
|
Year Ended |
|||||||||||
|
December 31, |
|||||||||||
|
2022 |
2021 |
||||||||||
|
U.S. dollars in thousands
|
Percentage change
|
||||||||||
|
||||||||||||
Research and development, net |
35,640 |
31,336 |
14 |
% | ||||||||
Selling and marketing |
21,694 |
21,512 |
1 |
% | ||||||||
General and administrative |
18,850 |
15,587 |
21 |
% | ||||||||
Impairment of held for sale asset
|
771 |
651 |
18 |
% | ||||||||
Total operating expenses
|
76,955 |
69,086 |
11 |
% |
Year Ended |
Year Ended |
|||||||||||||||||||
December 31, |
December 31, |
|||||||||||||||||||
|
2021 |
2020 |
2021 |
2020 |
||||||||||||||||
|
U.S. dollars in thousands
|
Percentage change
|
Percentage of revenues
|
|||||||||||||||||
Satellite Networks |
115,408 |
82,050 |
41 |
% |
54 |
% |
49 |
% | ||||||||||||
Integrated Solutions |
50,054 |
39,120 |
28 |
% |
23 |
% |
24 |
% | ||||||||||||
Network Infrastructure & Services |
49,508 |
44,965 |
10 |
% |
23 |
% |
27 |
% | ||||||||||||
Total |
214,970 |
166,135 |
29 |
% |
100.0 |
% |
100.0 |
% |
Year Ended |
Year Ended |
|||||||||||||||
|
December 31, |
December 31, |
||||||||||||||
|
2021 |
2020 |
2021 |
2020 |
||||||||||||
U.S. dollars in thousands
|
Percentage of revenues
|
|||||||||||||||
Satellite Networks |
50,800 |
32,281 |
44 |
% |
39 |
% | ||||||||||
Integrated Solutions |
16,625 |
8,861 |
33 |
% |
23 |
% | ||||||||||
Network Infrastructure & Services
|
3,842 |
238 |
8 |
% |
1 |
% | ||||||||||
Total |
71,267 |
41,380 |
33 |
% |
25 |
% |
• |
The increase in the Satellite Networks operating segment was
mainly attributable to a higher revenue and a favorable deal mix. |
• |
The increase in the Integrated Solutions operating segment
is mainly due to a higher revenue and a favorable deal mix. |
• |
The increase
in the Network Infrastructure and Services operating segment was
mainly attributable to a favorable deal mix. |
|
Year Ended |
|||||||||||
|
December 31, |
|||||||||||
|
2021 |
2020 |
||||||||||
|
U.S. dollars in thousands
|
Percentage change
|
||||||||||
|
||||||||||||
Research and development, net |
31,336 |
26,303 |
19.1 |
% | ||||||||
Selling and marketing |
21,512 |
16,871 |
27.5 |
% | ||||||||
General and administrative |
15,587 |
14,063 |
10.8 |
% | ||||||||
Merger, acquisition and related litigation
expenses (income), net |
- |
(53,633 |
) |
|||||||||
Impairment of held for sale asset |
651 |
- |
||||||||||
Total operating expenses
|
69,086 |
3,604 |
B. |
Liquidity and Capital Resources |
Years
Ended December 31, |
||||||||||||
2022 |
2021
|
2020
|
||||||||||
U.S.
dollars in thousands |
||||||||||||
Net cash provided by operating activities
|
10,814 |
18,903 |
43,160 |
|||||||||
Net cash used in investing activities
|
(8,164 |
) |
(11,092 |
) |
(4,716 |
) | ||||||
Net cash used in financing activities
|
- |
(39,003 |
) |
(24,095 |
) | |||||||
Effect of exchange rate changes on cash,
cash equivalents and restricted cash |
32 |
(303 |
) |
(360 |
) | |||||||
Net increase (decrease) in cash, cash equivalents
and restricted cash |
2,682 |
(31,495 |
) |
13,989 |
||||||||
Cash, cash equivalents and restricted cash
at beginning of the period |
84,463 |
115,958 |
101,969 |
|||||||||
Cash, cash equivalents and restricted cash
at end of the period… |
87,145 |
84,463 |
115,958 |
C. |
Research and
Development |
Years Ended December 31,
|
||||||||||||
2022 |
2021 |
2020 |
||||||||||
(U.S. dollars in thousands)
|
||||||||||||
Gross research and development costs. |
36,281 |
33,031 |
27,689 |
|||||||||
Less: |
||||||||||||
Grants |
641 |
1,695 |
1,386 |
|||||||||
Research and development costs – net. |
35,640 |
31,336 |
26,303 |
D. |
Trend Information |
ITEM 6: |
DIRECTORS AND SENIOR MANAGEMENT |
A. |
Directors and Senior Management |
Name |
Age |
Position |
Amiram Boehm |
51 |
Chairman of the Board of Directors |
Adi Sfadia |
52 |
Chief Executive Officer |
Ronit Zalman Malach (3)(4) |
56 |
Director |
Aylon
(Lonny) Rafaeli (1) (2)(4) |
69 |
Director |
Dafna
Sharir (1)(4) |
55 |
Director |
Elyezer Shkedy (1)(2)(4)(5) |
65 |
Director |
Ami Shafran (1)(2)(4)(5) |
68 |
Director |
Gil Benyamini |
49 |
Chief Financial Officer |
Michal Aharonov |
51 |
Chief Commercial Officer |
Ron Levin |
48 |
Chief Operating Officer |
Lior Moyal |
45 |
Senior Vice President, Human Resources |
Hagay Katz |
63 |
Chief Product and Marketing Officer |
Aharon Mullokandov |
39 |
Senior Vice President of Research & Development |
Doron Kerbel |
51 |
General Counsel & Company Secretary |
(1) |
Member of our Audit Committee. |
(2) |
Member of our Compensation Committee. |
(3) |
“Independent Director” under the applicable NASDAQ
Marketplace Rules (see explanation below) |
(4) |
“Independent Director” under the applicable NASDAQ
Marketplace Rules and the applicable rules of the SEC (see explanation below) |
(5) |
“External Director” as required by Israel’s
Companies Law (see explanation below) |
Board Diversity Matrix (As of March 1, 2023) | ||||
Country of Principal Executive Offices: |
Israel | |||
Foreign Private Issuer |
Yes | |||
Disclosure Prohibited under Home Country Law |
No | |||
Total Number of Directors |
6 | |||
|
Female |
Male |
Non-binary |
Did Not Disclose Gender |
Part I: Gender Identity |
| |||
Directors |
2 |
4 |
0 |
0 |
Part II: Demographic Background |
| |||
Underrepresented Individual in Home Country Jurisdiction
|
0 | |||
LGBTQ |
0 | |||
Did Not Disclose Demographic Background |
6 | |||
Directors with Disabilities |
0 |
B. |
Compensation of Directors and Officers |
Salaries,
Fees, Directors’ Fees,
Commissions and Bonuses (1) |
Amounts
Set Aside for Pension, Retirement and
Similar Benefits |
|||||||
All
directors and officers as a group (18 persons)
(2) |
$ |
4,654,294 |
$ |
376,297 |
(1) |
Includes bonuses and equity-based compensation accrued in 2022,
but does not include business travel, professional and business association dues and expenses reimbursed to our directors and officers,
and other benefits commonly reimbursed or paid by companies in Israel. |
(2) |
Includes one director and two officers who ceased to hold office
during 2022 and were replaced by newly appointed officers. |
Information Regarding
the Covered Executive in U.S. dollars (1) |
||||||||||||||||||||
Name
and Principal Position |
Base Salary |
Benefits
and Perquisites(2) |
Variable Compensation(3)
|
Equity-Based
Compensation(4) |
Total
|
|||||||||||||||
Adi Sfadia, Chief Executive Officer |
391,378 |
32,367 |
323,916 |
229,466 |
977,127 |
|||||||||||||||
Isaac Angel, former Chairman of the Board of Directors(5)
|
144,740 |
- |
117,317 |
512,602 |
774,659 |
|||||||||||||||
Hagay Katz, Chief Product and Marketing Officer |
249,059 |
50,654 |
104,617 |
108,425 |
512,756 |
|||||||||||||||
Michal Aharonov, Chief Commercial
Officer |
256,175 |
50,590 |
108,177 |
84,668 |
499,610 |
|||||||||||||||
Ron Levin, Chief
Operating Officer |
256,175 |
51,512 |
103,432 |
79,661 |
490,780 |
(1) |
All amounts reported
in the table are in terms of cost to our company, as recorded in our financial statements. |
(2) |
Amounts reported in
this column include benefits and perquisites, including those mandated by applicable law. Such benefits and perquisites may include, to
the extent applicable to each executive, payments, contributions and/or allocations for savings funds, pension, severance, vacation, car
or car allowance, medical insurances and benefits, risk insurances (e.g., life, disability, accident), convalescence pay, payments for
social security and other benefits and perquisites consistent with our guidelines, but do not include business travel, relocation, professional
and business association dues and expenses reimbursed to our directors and officers. |
(3) |
Amounts reported in this column refer to
Variable Compensation such as commissions, incentive and bonus payments payable upon conditions met in the year ended December 31, 2022
and recorded in our financial statements. |
(4) |
Amounts reported in
this column represent the expense recorded in our financial statements for the year ended December 31, 2022, with respect to equity-based
compensation granted to the Covered Executive. |
(5) |
Mr. Angel resigned
effective March 8, 2023. |
• |
the majority includes at least a majority of the shares voted
by shareholders other than our controlling shareholders or shareholders who have a personal interest in the adoption of the Executive
Compensation Policy; or |
• |
the total number of shares held by non-controlling shareholders
and disinterested shareholders that voted against the adoption of the Executive Compensation Policy does not exceed 2% of the aggregate
voting rights of our company. |
C. |
Board Practices |
• |
such majority includes at least a majority of the shares held by all shareholders
who are not controlling shareholders and do not have a personal interest in such appointment, present and voting at such meeting; or
|
• |
the total number of shares of non-controlling shareholders and shareholders who
do not have a personal interest in such appointment voting against such appointment does not exceed two percent of the aggregate voting
rights in the company. |
• |
a breach by the office holder of his fiduciary duty unless the office holder acted
in good faith and had a reasonable basis to believe that the act would not prejudice the company; |
• |
a breach by the office holder of his duty of care if such breach was performed intentionally
or recklessly; |
• |
any act or omission carried out with the intent to derive an illegal personal gain;
or |
• |
any fine or penalty levied against the office holder as a result of a criminal offense.
|
D. |
Employees |
E. |
Share Ownership |
F. |
DISCLOSURE OF A REGISTRANT’S ACTION
TO RECOVER ERRONEOUSLY AWARDED COMPENSATION |
ITEM 7: |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
A. |
Major Shareholders |
Name |
Number of Shares
|
Percent
|
||||||
Phoenix Holdings Ltd. (1)
|
10,828,962 |
19.13 |
% | |||||
Meitav Investment House Ltd.(2)
|
4,787,687 |
8.46 |
% | |||||
Thrivent Financial for Lutherans (3) |
2,828,771 |
5.00 |
% | |||||
All directors and executive officers as a group (15 persons)
(4) |
692,934 |
1.22 |
% |
(1) |
Based on Schedule 13G filed on February 14, 2023 with the SEC by Phoenix Holdings
Ltd. and information provided to us by Phoenix Holdings Ltd., as of January 1, 2023. The ordinary shares reported are beneficially owned
by various direct or indirect, majority or wholly-owned subsidiaries of Benelus Lux S.a.r.l and/or Phoenix Holdings Ltd. and/or Excellence
Investments Ltd. The Subsidiaries manage their own funds and/or the funds of others, including for holders of exchange-traded notes or
various insurance policies, members of pension or provident funds, unit holders of mutual funds, and portfolio management clients. CP
III Cayman GP Ltd., Matthew Botein and Lewis (Lee) Sachs are the controlling shareholders of Benelus Lux S.a.r.l. The principal office
of Phoenix Holdings Ltd. is 53 Derech Hashalom Drive, Ramat Gan 5345433. |
(2) |
Based on Schedule 13G filed on January 11, 2023 with the SEC by Meitav Investment
House Ltd. (“Meitav”) and information provided to us by Meitav as of January 11, 2023. The ordinary shares reported are beneficially
owned by various direct or indirect, majority or wholly-owned subsidiaries of Meitav (the "Subsidiaries"). Some of the securities
reported in the filing are held by third-party client accounts managed by a subsidiary of Meitav as portfolio managers, which subsidiary
operates under independent management and makes independent investment decisions and has no voting power in the securities held in such
client accounts. The Subsidiaries manage their own funds and/or the funds of others, including for holders of exchange-traded notes
or members of pension or provident funds, unit holders of mutual funds, and portfolio management clients. Each of the Subsidiaries
operates under independent management and makes its own independent voting and investment decisions. The principal office of Meitav. is
30 Derekh Sheshet Ha-Yamim, Bnei Brak, Israel. |
(3) |
Based on Schedule 13G filed on February 7, 2023 with the SEC by Thrivent Financial
for Lutherans ("Thrivent"). The ordinary shares reported are beneficially owned by a Thrivent trusts and subsidiaries for which Thrivent
Financial for Lutherans serves as investment adviser. The ordinary shares were acquired and are held in the ordinary course of business
and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the
securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect,
other than activities solely in connection with a nomination under §240.14a-11 The principal office of Thrivent Financial for
Lutherans is 1651 Old Medow Rd McLean, VA 22102. |
(4) |
As of March 6, 2023, all directors and executive officers as a group (15 persons)
held 692,934 options that are vested or that vest within 60 days of March 6, 2023. |
B. |
Related Party Transactions |
C. |
Interests of Experts and Counsel |
ITEM 8: |
FINANCIAL INFORMATION |
A. |
Consolidated Statements |
ITEM 9: |
THE OFFER AND LISTING |
A. |
Offer and Listing Details |
B. |
Plan of Distribution |
C. |
Markets |
D. |
Selling Shareholders |
E. |
Dilution |
F. |
Expense of the Issue |
ITEM 10: |
ADDITIONAL INFORMATION |
A. |
Share Capital |
B. |
Memorandum and Articles of Association |
C. |
Material Contracts |
D. |
Exchange Controls |
E. |
Taxation |
• |
broker-dealers; |
• |
financial institutions or financial services entities; |
• |
certain insurance companies; |
• |
investors liable for alternative minimum tax; |
• |
regulated investment companies, real estate investment trusts, or grantor trusts;
|
• |
dealers or traders in securities, commodities or currencies; |
• |
tax-exempt organizations; |
• |
retirement plans; |
• |
S corporations |
• |
pension funds; |
• |
certain former citizens or long-term residents of the United States; |
• |
non-resident aliens of the United States or taxpayers whose
functional currency is not the U.S. dollar; |
• |
persons who hold ordinary shares
through partnerships or other pass-through entities; |
• |
persons who acquire their ordinary
shares through the exercise or cancellation of employee stock options or otherwise as compensation for services;
|
• |
direct, indirect
or constructive owners of investors that actually or constructively own
at least 10% of the total combined voting power of our shares or at least 10% of our shares by value; or |
• |
investors holding ordinary shares as part of a straddle, appreciated financial position,
a hedging transaction or conversion transaction. |
• |
an individual who is a citizen or a resident (for U.S. federal income tax purposes)
of the United States; |
• |
a corporation or other entity taxable as a corporation for U.S. federal income tax
purposes, created or organized in or under the laws of the United States or any political subdivision thereof or the District of Columbia;
|
• |
an estate the income of which is subject to U.S. federal income taxation regardless
of its source; or |
• |
a trust resident in the United States, to the extent such trust's income is subject
to US tax as the income of a resident. |
F. |
Dividend and Paying Agents |
G. |
Statement by Experts |
H. |
Documents on Display |
I. |
Subsidiary Information |
ITEM 11: |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 12: |
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
|
ITEM 13: |
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14: |
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
USE OF PROCEEDS |
ITEM 15: |
CONTROLS AND PROCEDURES |
• |
Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transaction and dispositions of the assets of the company; |
• |
Provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
|
• |
Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use of disposition of the company’s assets that could have a material effect on the financial
statements. |
ITEM 16: |
RESERVED |
ITEM 16A: |
AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16B: |
CODE OF ETHICS |
Year Ended December 31,
|
||||||||||||||||
2022 |
2021 |
|||||||||||||||
Services Rendered
|
Fees
(in thousands) |
Percentages |
Fees
(in thousands) |
Percentages
|
||||||||||||
Audit
fees (1) |
$ |
906 |
81 |
% |
$ |
570 |
77.6 |
% | ||||||||
Tax
fees (2) |
$ |
68 |
6 |
% |
$ |
99 |
13.5 |
% | ||||||||
Other (3) |
$ |
140 |
13 |
% |
$ |
65 |
8.9 |
% | ||||||||
Total |
$ |
1,114 |
100 |
% |
$ |
734 |
100 |
% |
(1) |
Audit fees include fees associated with the annual audit, services
provided in connection with audit of our internal control over financial reporting and audit services provided in connection with other
statutory or regulatory filings. The fees for 2022 include one-time fees of $235 thousand with respect to 2021 audit overrun. |
(2) |
Tax fees are fees for professional services rendered by our
auditors for tax compliance, tax planning and tax advice on actual or contemplated transactions. |
(3) |
Other fees are fees for professional services other than audit
or tax related fees, rendered in connection with our business activities. |
ITEM 16D. |
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|
ITEM 16E: |
PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
|
ITEM 16F: |
CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT |
ITEM 16G. |
CORPORATE GOVERNANCE |
• |
The requirement to obtain shareholder approval for the establishment
or material amendment of certain equity-based compensation plans and arrangements, under which shares may be acquired by officers, directors,
employees or consultants. Under Israeli law and practice, the approval of the board of directors is required for the establishment or
material amendment of such equity-based compensation plans and arrangements. However, any equity based compensation arrangement with a
director or the Chief Executive Officer or the material amendment of such an arrangement must be approved by our Compensation Committee,
Board of Directors and shareholders, in that order. |
• |
The requirements regarding the director nominations process. We do not have a nomination
committee. Under Israeli law and practice, our Board of Directors is authorized to recommend to our shareholders director nominees for
election, and certain of our shareholders may nominate candidates for election as directors by the general meeting of shareholders.
|
ITEM 16H. |
MINE SAFETY DISCLOSURE |
ITEM 16I. |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
|
ITEM 17: |
FINANCIAL STATEMENTS |
ITEM 18: |
FINANCIAL STATEMENTS |
ITEM 19: |
EXHIBITS |
1.1 |
Memorandum of Association, as amended. Previously filed as Exhibit 1.1 to our Annual Report on Form 20-F
for the fiscal year ending December 31, 2000, which Exhibit is incorporated herein by reference. |
101.INS |
Inline XBRL Instance Document *. |
101.SCH |
Inline XBRL Taxonomy Extension Schema Document.
|
101.PRE |
Inline XBRL Taxonomy Presentation Linkbase Document.
|
101.CAL |
Inline XBRL Taxonomy Calculation Linkbase Document.
|
101.LAB |
Inline XBRL Taxonomy Label Linkbase Document.
|
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase
Document. |
104 |
Cover page formatted as Inline XBRL and contained in Exhibit
101 |
* |
Pursuant to Rule 406T of Regulation S-T, these interactive
data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities
Act of 1933, as amended, are deemed not filed for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and
otherwise are not subject to liability under those sections. |
|
GILAT SATELLITE NETWORKS LTD.
By: /s/
Adi Sfadia
Adi
Sfadia
Chief
Executive Officer |
Page
|
|
F-2 - F-4
|
F-5 - F-6
|
|
|
|
F-7
|
|
|
|
F-8
|
|
|
|
F-9
|
|
|
|
F-10 - F-12
|
|
|
|
F-13 - F-57
|
- - - - - - - - - - -
|
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
|
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
|
Revenue Recognition
|
||
Description of the Matter
|
As described in Note 2 to the consolidated financial statements, the Company generates revenue from long-term contracts under which the Company provides significant construction to the customer's specifications and networks operation and maintenance, mainly governmental projects, for which the related performance obligations are primarily satisfied over time due to continuous transfer of control to the customer. The Company recognizes revenue on such contracts using the percentage-of-completion method of accounting, based primarily on cost-to-cost measure of progress ("input method"). Under this method, the Company measures progress towards completion based on the ratio of costs incurred to date to the estimated total costs to complete their performance obligation (referred to as the estimate-at-completion, or “EAC”).
The determination of contract EACs requires management to make significant estimates and assumptions to calculate recorded contract revenue, costs, and profit. At the outset of a long-term contract, the Company identifies risks related to the achievement of the technical, schedule and cost aspects of the contract. Significant changes in EAC estimates could have a material effect on the Company’s estimated revenue and gross profit recorded during the period under audit.
Auditing the Company’s estimates of total contract revenue and costs used to recognize revenue based on the percentage-of-completion method of accounting was complex due to the significant auditor judgment involved in evaluating management's significant estimates and assumptions over project technical, schedule and cost aspects, at contract inception and throughout the contract's life cycle.
|
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of relevant internal controls over the Company’s revenue recognition process. For example, we tested internal controls over management’s preparation and periodic reviews of the cost incurred, as well as controls over cost deviation analysis, including the significant assumptions underlying a contract’s estimated value and estimated EAC. We also tested internal controls over the accuracy and completeness of the underlying data used in management’s EAC analyses.
To evaluate the Company’s contract estimates related to revenue recognized and test the Company's EAC analyses, our substantive audit procedures included, among others, inspecting contracts and the related contractual terms, evaluating the appropriateness of management’s estimation process from the inception of a contract, and evaluating the Company's historical ability to accurately estimate expected costs by comparing management's estimates of labor hours, subcontractor costs and materials required to complete the contract to actual results. We also compared recorded costs incurred to supporting information and agreed key contract terms to contract documentation. In addition, we evaluated whether the variances in costs incurred from projected costs were properly reflected in the EAC analysis. In addition, we assessed the appropriateness of the related disclosures in the consolidated financial statements.
|
|
Valuation of deferred tax asset
|
||
Description of the Matter
|
As described in Note 12 to the consolidated financial statements, the Company’s consolidated net deferred tax assets of $18,265 thousands, primarily related to the deferred tax assets established for carry forward operating losses. Management records valuation allowances to reduce the carrying value of deferred tax assets to amounts that are more likely than not to be realized. Management assesses existing deferred tax assets, net operating losses and tax credits by jurisdiction and expectations of the Company’s ability to utilize these tax attributes through a review of past, current and estimated future taxable income and establishment of tax planning strategies.
The principal considerations for our determination that performing procedures relating to the income tax valuation allowances on deferred tax assets is a critical audit matter are there was significant judgment by management when estimating future taxable income. Auditing management’s assessment of the realizability of its deferred tax assets involved complex auditor judgment because management’s estimate of future taxable income is highly judgmental and based on significant assumptions that may be affected by future market conditions and the Company’s performance.
|
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over management’s plan for future realization of deferred tax assets. For example, we tested controls around the determination of key assumptions used in management’s projections of future taxable income.
To test the deferred income tax asset, our audit procedures included, among others, comparing the assumptions used by management to the Company´s approved budget, evaluating management assumptions to develop estimates of future taxable income, and tested the completeness and accuracy of the underlying data. For example, we compared the estimates of future taxable income with the actual results of prior periods, as well as management's consideration of other future market conditions. Additionally, evaluating the application of the relevant accounting standard, retrospectively assessing past management estimations about net deferred tax asset recoverability, and comparing the prospective financial information and underlying assumptions to industry and economic trends, changes in the entity’s business model, customer base and product mix. In addition, we assessed the adequacy of the related disclosures in the consolidated financial statements.
|
/s/ KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
|
Tel-Aviv, Israel
March 13, 2023
|
|
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road, Building A,
Tel-Aviv 6492102, Israel
|
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
|
/s/
A Member of Ernst & Young Global
|
March 13, 2023
|
December 31,
|
||||||||
2022
|
2021
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Short-term deposits
|
|
|
||||||
Restricted cash
|
|
|
||||||
Trade receivables (net of allowance for credit losses of $
|
|
|
||||||
Contract assets
|
|
|
||||||
Inventories
|
|
|
||||||
Other current assets
|
|
|
||||||
Held for sale asset
|
|
|
||||||
Total current assets
|
|
|
||||||
LONG-TERM ASSETS:
|
||||||||
Restricted cash
|
|
|
||||||
Long-term contract assets
|
|
|
||||||
Severance pay funds
|
|
|
||||||
Deferred taxes
|
|
|
||||||
Operating lease right-of-use assets
|
|
|
||||||
Other long-term assets
|
|
|
||||||
Total long-term assets
|
|
|
||||||
PROPERTY AND EQUIPMENT, NET
|
|
|
||||||
INTANGIBLE ASSETS, NET
|
|
|
||||||
GOODWILL
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
December 31,
|
||||||||
2022
|
2021
|
|||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Trade payables
|
$
|
|
$
|
|
||||
Accrued expenses
|
|
|
||||||
Advances from customers and deferred revenues
|
|
|
||||||
Operating lease liabilities
|
|
|
||||||
Other current liabilities
|
|
|
||||||
Total current liabilities
|
|
|
||||||
LONG-TERM LIABILITIES:
|
||||||||
Accrued severance pay
|
|
|
||||||
Long-term advances from customers and deferred revenues
|
|
|
||||||
Operating lease liabilities
|
|
|
||||||
Other long-term liabilities
|
|
|
||||||
Total long-term liabilities
|
|
|
||||||
COMMITMENTS AND CONTINGENCIES
|
||||||||
SHAREHOLDERS' EQUITY:
|
||||||||
Share capital -
Ordinary shares of NIS
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
Total shareholders' equity
|
|
|
||||||
Total liabilities and shareholders' equity
|
$
|
|
$
|
|
F - 6
Year ended December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Revenues:
|
||||||||||||
Products
|
$
|
|
$
|
|
$
|
|
||||||
Services
|
|
|
|
|||||||||
Total revenues
|
|
|
|
|||||||||
Cost of revenues:
|
||||||||||||
Products
|
|
|
|
|||||||||
Services
|
|
|
|
|||||||||
Total cost of revenues
|
|
|
|
|||||||||
Gross profit
|
|
|
|
|||||||||
Operating expenses:
|
||||||||||||
Research and development, net
|
|
|
|
|||||||||
Selling and marketing
|
|
|
|
|||||||||
General and administrative
|
|
|
|
|||||||||
Merger, acquisition and related litigation expenses (income), net
|
|
|
(
|
)
|
||||||||
Impairment of held for sale asset
|
|
|
|
|||||||||
Total operating expenses
|
|
|
|
|||||||||
Operating income
|
|
|
|
|||||||||
Financial expenses, net
|
|
|
|
|||||||||
Income before taxes on income
|
|
|
|
|||||||||
Taxes on income
|
|
|
|
|||||||||
Net income (loss)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||
Total earnings (losses) per share:
|
||||||||||||
Basic
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||
Diluted
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||
Weighted average number of shares used in computing earnings (losses) per share:
|
||||||||||||
Basic
|
|
|
|
|||||||||
Diluted
|
|
|
|
Year ended December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Net income (loss)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||
Other comprehensive income (loss):
|
||||||||||||
Foreign currency translation adjustments
|
|
(
|
)
|
(
|
)
|
|||||||
Change in unrealized gain (loss) on hedging instruments, net
|
(
|
)
|
|
|
||||||||
Less - reclassification adjustments for net loss (gain) realized on hedging instruments, net
|
|
(
|
)
|
(
|
)
|
|||||||
Total other comprehensive loss
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Comprehensive income (loss)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
Number of
ordinary
shares
|
Share
capital
|
Additional
paid-in
capital
|
Accumulated
other
comprehensive
income (loss)
|
Accumulated
Deficit
|
Total
shareholders' equity
|
|||||||||||||||||||
Balance as of December 31, 2019
|
|
|
|
(
|
)
|
(
|
)
|
|
||||||||||||||||
Stock-based compensation of options
|
-
|
|
|
|
|
|
||||||||||||||||||
Exercise of stock options
|
|
|
(
|
)
|
|
|
|
|||||||||||||||||
Dividend distribution
|
-
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Dividend payable
|
-
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Comprehensive income (loss)
|
-
|
|
|
(
|
)
|
|
|
|||||||||||||||||
Balance as of December 31, 2020
|
|
|
|
(
|
)
|
(
|
)
|
|
||||||||||||||||
Stock-based compensation of options
|
-
|
|
|
|
|
|
||||||||||||||||||
Exercise of stock options
|
|
|
(
|
)
|
|
|
|
|||||||||||||||||
Comprehensive loss
|
-
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||
Balance as of December 31, 2021
|
|
|
|
(
|
)
|
(
|
)
|
|
||||||||||||||||
Stock-based compensation of options
|
-
|
|
|
|
|
|
||||||||||||||||||
Exercise of stock options
|
|
|
(
|
)
|
|
|
|
|||||||||||||||||
Comprehensive loss
|
-
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||
Balance as of December 31, 2022
|
|
|
|
(
|
)
|
(
|
)
|
|
Year ended December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income (loss)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||
Adjustments required to reconcile net income (loss) to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
|
|
|
|||||||||
Capital loss from disposal of property and equipment and impairment of held for sale asset
|
|
|
|
|||||||||
Stock-based compensation of options
|
|
|
|
|||||||||
Accrued severance pay, net
|
|
|
|
|||||||||
Deferred taxes, net
|
(
|
)
|
|
(
|
)
|
|||||||
Decrease (increase) in trade receivables, net
|
(
|
)
|
(
|
)
|
|
|||||||
Decrease (increase) in contract assets
|
|
|
(
|
)
|
||||||||
Decrease (increase) in other assets (including short-term, long-term and deferred charges)
|
(
|
)
|
(
|
)
|
|
|||||||
Decrease (increase) in inventories
|
(
|
)
|
|
(
|
)
|
|||||||
Decrease in trade payables
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Increase (decrease) in accrued expenses
|
|
(
|
) |
(
|
)
|
|||||||
Increase (decrease) in advances from customers and deferred revenues
|
|
(
|
)
|
(
|
)
|
|||||||
Increase (decrease) in other liabilities
|
|
(
|
)
|
|
||||||||
Net cash provided by operating activities
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Cash flows from investing activities:
|
||||||||||||
Purchase of property and equipment
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Repayment of (investment in) short-term deposits
|
|
(
|
)
|
|
||||||||
Investment in financial instrument
|
(
|
)
|
|
|
||||||||
Receipts from sale of held for sale asset
|
|
|
|
|||||||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Cash flows from financing activities:
|
||||||||||||
Dividend payment
|
|
(
|
)
|
(
|
)
|
|||||||
Repayment of long-term loans
|
|
(
|
)
|
(
|
)
|
|||||||
Net cash used in financing activities
|
|
(
|
)
|
(
|
)
|
|||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
(
|
)
|
(
|
)
|
|||||||
Increase (decrease) in cash, cash equivalents and restricted cash
|
|
(
|
)
|
|
||||||||
Cash, cash equivalents and restricted cash at the beginning of the year
|
|
|
|
|||||||||
Cash, cash equivalents and restricted cash at the end of the year (a)
|
$
|
|
$
|
|
$
|
|
||||||
Supplementary disclosure of cash flows activities:
|
||||||||||||
(A) Cash paid during the year for:
|
||||||||||||
Interest
|
$
|
|
$
|
|
$
|
|
||||||
Taxes on income
|
$
|
|
$
|
|
$
|
|
||||||
(B) Non-cash transactions:
|
||||||||||||
Purchases of property and equipment that were not paid for and reclassification from inventories to property and equipment
|
$
|
|
$
|
|
$
|
|
||||||
Reclassification from property and equipment to inventories
|
$
|
|
$
|
|
$
|
|
||||||
New operating lease assets obtained in exchange for operating lease liabilities
|
$
|
|
$
|
|
$
|
|
||||||
Dividends declared
|
$
|
|
$
|
|
$
|
|
(a) |
The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheets:
|
December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
||||||
Restricted cash - Current
|
|
|
|
|||||||||
Restricted cash - Long-Term
|
|
|
|
|||||||||
Cash, cash equivalents and restricted cash
|
$
|
|
$
|
|
$
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 1:-GENERAL
a.Organization:
Gilat Satellite Networks Ltd. and its subsidiaries (the “Company”) is a global provider of satellite-based broadband communications. The Company designs and manufactures ground-based satellite communications equipment, and provides comprehensive solutions and end-to-end services, powered by its technology. The Company’s portfolio includes a cloud-based satellite network platform, Very Small Aperture Terminals ("VSATs"), amplifiers, high-speed modems, high-performance on-the-move antennas, high power Solid-State Power Amplifiers ("SSPAs"), Block Up Converters (“BUCs”) and Transceivers. The Company’s solutions support multiple applications with a full portfolio of products to address key applications including broadband access, cellular backhaul, enterprise, In-Flight Connectivity ("IFC"), maritime, trains, defense and public safety. The Company also provides connectivity services, internet access and telephony, to enterprise, government and residential customers utilizing both its own networks, and other networks that it installs, mainly based on Build Operate Transfer (“BOT”) and Build Own Operate (“BOO”) contracts. In these projects, the Company builds telecommunication infrastructure typically using fiber-optic and wireless technologies for the broadband connectivity. The Company also provides managed network services over VSAT networks owned by others.
The Company was incorporated in Israel in 1987 and launched its first generation VSAT in 1989.
As of December 31, 2022, the Company operates in three operating segments consisting of Satellite Networks, Integrated Solutions and Network Infrastructure and Services. For additional information, including major customers, geographic and segment information, see Note 15.
b.The Company depends on major suppliers to supply certain components and services for the production of its products or providing services. If these suppliers fail to deliver or delay 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 product redesign, manufacturing delays or services delays which could cause a possible loss of sales and additional incremental costs and, consequently, could adversely affect the Company's results of operations and financial position.
F - 13
GILAT SATELLITE NETWORKS LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 1:-GENERAL (Cont.)
c. |
The COVID-19 pandemic had an adverse effect on the Company’s industry and the markets in which the Company operates. As a result, the Company experienced a significant reduction in business in 2020. The regression of the pandemic during 2022, followed by lifting of travel restrictions and social distancing regulations, led to a recovery in the Company’s business. In the year ended December 31, 2022 the Company’s revenues were $
|
d.The Company has two major customers which accounted for
e.The recent military conflict of Russia and Ukraine and the rising tensions between the U.S. and other countries, on the one hand, and Russia, on the other hand, caused major economic sanctions and export controls restrictions on Russia and various Russian entities were imposed by the U.S., European Union and the United Kingdom commencing February 2022, and additional sanctions and restrictions may be imposed in the future. These sanctions and restrictions may restrict the Company’s business in Russia, which mainly includes exports to Russia, and may delay or prevent the Company from collecting funds and perform money transfers from Russia. While the Company’s business in Russia is of limited in scope, these restrictions may cause a reduction of the Company’s sales and financial results. In addition, The Company receives manufacturing services from a global manufacturer’s facility in Ukraine. While the manufacturer assured the Company that the operations of the plant have not been interrupted by the military situation in Ukraine and has a recovery plan in place, there is no assurance that negative developments in the area in the future will not disrupt the Company’s business and materially adversely affect it.
F - 14
GILAT SATELLITE NETWORKS LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES
|
a. |
Use of estimates:
|
b. |
Functional currency:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
c. |
Principles of consolidation:
|
d. |
Cash and Cash equivalents:
|
e. |
Short-term restricted cash:
|
f. |
Inventories:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
g. |
Property and equipment, net:
|
Years
|
|
Buildings
|
|
Computers, software and electronic equipment
|
|
Office furniture and equipment
|
|
Vehicles
|
|
h. |
Intangible assets:
|
i. |
Impairment of long-lived assets:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
k. |
Contingencies:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
l. |
Revenue recognition:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
m. |
Selling and marketing expenses:
|
n. |
Warranty costs:
|
o. |
Research and development expenses:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
p. |
Research and development grants:
|
q. |
Accounting for stock-based compensation:
|
r. |
Taxes on income:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
s. |
Concentrations of credit risks:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
t. |
Employee related benefits:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
u. |
Fair value of financial instruments:
|
Level 1 - |
Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.
|
Level 2 - |
Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
|
Level 3 - |
Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
|
GILAT SATELLITE NETWORKS LTD. AND ITS SUBSIDIARIES
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
v. |
Earnings per share:
|
w. |
Derivatives and hedging activities:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
x. |
Comprehensive income (loss):
|
December 31, 2022
|
||||||||||||
Foreign
currency
translation
adjustments
|
Unrealized
gains (losses)
on cash flow
hedges
|
Total
|
||||||||||
Beginning balance
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||
Other comprehensive income (loss) before reclassifications
|
|
(
|
)
|
(
|
)
|
|||||||
Amounts reclassified from accumulated other comprehensive loss
|
|
|
|
|||||||||
Net current-period other comprehensive income (loss)
|
|
(
|
)
|
(
|
)
|
|||||||
Ending balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
December 31, 2021
|
||||||||||||
Foreign
currency
translation
adjustments
|
Unrealized
gains (losses)
on cash flow
hedges
|
Total
|
||||||||||
Beginning balance
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||
Other comprehensive income (loss) before reclassifications
|
(
|
)
|
|
(
|
)
|
|||||||
Amounts reclassified from accumulated other comprehensive income
|
|
(
|
)
|
(
|
)
|
|||||||
Net current-period other comprehensive income (loss)
|
(
|
)
|
|
(
|
)
|
|||||||
Ending balance
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
y. |
Leases:
|
The Company leases real estate and storage areas, which are all classified as operating leases. In addition to rent payments, the leases may require the Company to pay for insurance, maintenance and other operating expenses.
Lease classification is governed by five criteria in ASC 842. If any of these five criteria is met, the Company classifies the lease as a finance lease. Otherwise, the Company classifies the lease as an operating lease.
Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at the commencement date to determine the present value of the lease payments. Operating lease expenses are recognized on a straight-line basis over the lease term. Exchange rate differences related to lease liabilities are recognized as incurred as financial income or expense. Several of the Company’s leases include options to extend the lease. For the purpose of calculating lease liabilities, lease terms include options to extend the lease when it is reasonably certain that the Company will exercise such options. The Company’s lease agreements do not contain any material residual value guarantees.
The Company elected the short-term lease recognition exemption for all leases with a term shorter than twelve months, according to which the Company does not recognize ROU assets or lease liabilities, but recognizes lease expenses over the lease term on a straight-line basis. The Company also elected the practical expedient to not separate lease and non-lease components for all the Company’s leases.
|
z. |
Held for sale asset:
|
aa. |
Short-term deposits:
|
NOTE 2:- |
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
ab. |
Reclassifications:
|
ac. |
Recently issued and adopted accounting pronouncement:
|
NOTE 3:- |
INVENTORIES
|
a. |
Inventories are comprised of the following:
|
December 31,
|
||||||||
2022
|
2021*)
|
|
||||||
Raw materials, parts and supplies
|
$
|
|
$
|
|
||||
Work in progress and assembled raw materials
|
|
|
||||||
Finished products
|
|
|
||||||
$
|
|
$
|
|
*) |
Reclassified.
|
b. |
Inventory net write-offs amounted to $
|
NOTE 4:- |
PROPERTY AND EQUIPMENT, NET
|
a. |
Property and equipment, net consists of the following:
|
December 31,
|
||||||||
2022
|
2021
|
|||||||
Cost:
|
||||||||
Buildings and land
|
$
|
|
$
|
|
||||
Computers, software and electronic equipment
|
|
|
||||||
Network equipment
|
|
|
||||||
Office furniture and equipment
|
|
|
||||||
Vehicles
|
|
|
||||||
Leasehold improvements
|
|
|
||||||
|
|
|||||||
Accumulated depreciation
|
|
|
||||||
Depreciated cost
|
$
|
|
$
|
|
b. |
Depreciation expenses amounted to $
|
c. |
The Company leases part of its buildings as office spaces to others. The gross income generated from such leases amounted to approximately $
|
d. |
During the year ended December 31, 2021, a property of the Company in Germany was classified as held for sale. During the year ended December 31, 2022, the Company entered into an agreement for sale of the property, subject to fulfillment of certain conditions. During the year ended December 31, 2022, position in the property was transferred to the buyer and the registration of title is awaiting completion of certain requirements by the local registrar. The Company determined that control over the asset has been transferred to the buyer as of December 31, 2022, and therefore, the property was derecognized from the consolidated balance sheets.
|
NOTE 5:- |
DEFERRED REVENUES
|
NOTE 6:- |
INTANGIBLE ASSETS, NET
|
a. |
Intangible assets, net consisted of the following:
|
December 31,
|
||||||||
2022
|
2021
|
|||||||
Original amounts:
|
||||||||
Technology
|
$
|
|
$
|
|
||||
Customer relationships
|
|
|
||||||
Marketing rights and patents
|
|
|
||||||
|
|
|||||||
Accumulated amortization:
|
||||||||
Technology
|
|
|
||||||
Customer relationships
|
|
|
||||||
Marketing rights and patents
|
|
|
||||||
|
|
|||||||
$
|
|
$
|
|
b. |
Amortization expenses amounted to $
|
NOTE 6:- |
INTANGIBLE ASSETS, NET (Cont.)
|
c. |
Estimated amortization expenses for the following years is as follows:
|
Year ending December 31,
|
||||
2023
|
$
|
|
||
2024
|
|
|||
$
|
|
NOTE 7:- |
GOODWILL
|
December 31,
|
||||||||
2022
|
2021
|
|||||||
Goodwill
|
$
|
|
$
|
|
||||
Accumulated impairment losses
|
|
|
||||||
$
|
|
$
|
|
NOTE 8:- |
COMMITMENTS AND CONTINGENCIES
|
a. |
Commitments with respect to space segment services:
|
Year ending December 31,
|
||||
2023
|
|
|||
2024
|
|
|||
$
|
|
NOTE 8:- |
COMMITMENTS AND CONTINGENCIES (Cont.)
|
b. |
In 2022 and 2021, the Company's primary material purchase commitments were with inventory suppliers. The Company's material inventory purchase commitments are based on purchase orders, or on outstanding agreements with some of the Company's suppliers of inventory. As of December 31, 2022 and 2021, the Company's major outstanding inventory purchase commitments amounted to $
|
c. |
Royalty commitments:
|
1. |
Certain of the Company’s research and development programs funded by the Israel Innovation Authority ("IIA"), formerly known as the Office of the Chief Scientist of the Ministry of Economy of the Government of Israel, are royalty bearing programs. Sales of products developed as a result of such programs are subject to payment of royalties to the IIA. The royalty payments are at a rate of
|
2. |
Research and development projects undertaken by the Company were partially financed by the Binational Industrial Research and Development Foundation ("BIRD Foundation"). The Company is committed to pay royalties to the BIRD Foundation at a rate of
|
NOTE 8:- |
COMMITMENTS AND CONTINGENCIES (Cont.)
|
d. |
Litigation:
|
1. |
In 2003, the Brazilian tax authority filed a claim against the Company’s inactive subsidiary in Brazil, SPC International Ltda, for the payment of taxes allegedly due from the subsidiary. After numerous hearings and appeals at various appellate levels in Brazil, the Supreme Court ruled against the subsidiary in final non-appealable decisions published in June 2017. As of December 31, 2022, the total amount of this claim, including interest, penalties and legal fees is approximately $
|
2. |
In 2014, the Company’s Peruvian subsidiary, Gilat To Home Peru S.A. (“GTH”), initiated arbitration proceedings in Lima against the Ministry of Transport and Communications of Peru (“MTC”) and the Programa Nacional de Telecomunicaciones (“Pronatel”). The arbitration was related to the Pronatel projects awarded to the Company in 2000-2001. Under these projects, GTH provided fixed public telephony services in rural areas of Peru. GTH’s main claim was related to damages caused by the promotion of mobile telephony in such areas by the Peruvian government in the years 2011-2015. In June 2018, the arbitration tribunal issued an arbitration award ordering MTC and Pronatel to pay GTH approximately $
|
NOTE 8:- |
COMMITMENTS AND CONTINGENCIES (Cont.)
|
3. |
In 2018, Gilat Networks Peru S.A. (“GNP”), the Company’s subsidiary in Peru, won a government bid for two additional regional projects in the Amazonas and Ica regions in Peru for Pronatel with a contractual value of approximately $
|
4. |
The Company is also in the midst of different stages of audits and disputes with various tax authorities in different parts of the world. Further, the Company is the defendant in various other lawsuits, including employment-related litigation claims and may be subject to other legal proceedings in the normal course of its business. While the Company intends to defend the aforementioned matters vigorously, it believes that a loss in excess of its accrued liability with respect to these claims is not probable.
|
e. |
Guarantees:
|
NOTE 8:- |
COMMITMENTS AND CONTINGENCIES (Cont.)
|
NOTE 9:- |
LEASES
|
Year ended December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Operating lease expenses *)
|
$
|
|
$
|
|
$
|
|
||||||
Short-term lease expenses
|
|
|
|
|||||||||
Total lease expenses
|
$
|
|
$
|
|
$
|
|
F - 37
GILAT SATELLITE NETWORKS LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 9:- LEASES (Cont.)
2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Total future lease payments
|
|
|||
Less imputed interest
|
|
|||
Total lease liability balance
|
$
|
|
NOTE 10:- |
DERIVATIVE INSTRUMENTS
|
F - 38
GILAT SATELLITE NETWORKS LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share data)
NOTE 11:- |
SHAREHOLDERS' EQUITY
|
a. |
Share capital:
|
b. |
Stock option plans:
|
NOTE 11:- |
SHAREHOLDERS' EQUITY (Cont.)
|
Year ended December 31,
|
|||||||||
2022
|
2021
|
2020
|
|||||||
Risk free interest
|
|
|
|
|
|
||||
Dividend yields
|
0%
|
|
0%
|
|
|
||||
Volatility
|
|
|
|
|
|
||||
Expected term (in years)
|
|
|
-
|
NOTE 11:- |
SHAREHOLDERS' EQUITY (Cont.)
|
Number of
options
|
Weighted-
average
exercise price
*)
|
Weighted-
average
remaining
contractual
term
(in years)
|
Aggregate
intrinsic
value
(in thousands)
*)
|
|||||||||||||
Outstanding at January 1, 2022
|
|
$
|
|
|
$
|
|
||||||||||
Granted
|
|
$
|
|
|||||||||||||
Exercised
|
(
|
)
|
$
|
|
||||||||||||
Forfeited and cancelled
|
(
|
)
|
$
|
|
||||||||||||
Outstanding as of December 31, 2022
|
|
$
|
|
|
$
|
|
||||||||||
Exercisable as of December 31, 2022
|
|
$
|
|
|
$
|
|
NOTE 11:- |
SHAREHOLDERS' EQUITY (Cont.)
|
Year ended December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Cost of revenues of products
|
$
|
|
$
|
|
$
|
|
||||||
Cost of revenues of services
|
|
|
|
|||||||||
Research and development, net
|
|
|
|
|||||||||
Selling and marketing
|
|
|
|
|||||||||
General and administrative
|
|
|
|
|||||||||
$
|
|
$
|
|
$
|
|
c. |
Dividends:
|
1. |
In the event that cash dividends are declared by the Company, such dividends will be declared and paid in Israeli currency. Under current Israeli regulations, any cash dividend paid in Israeli currency in respect of ordinary shares purchased by non-residents of Israel with non-Israeli currency, may be freely repatriated in such non-Israeli currency, at the exchange rate prevailing at the time of repatriation.
|
2. |
Pursuant to the terms of a bank agreement, the Company is restricted from paying cash dividends to its shareholders without initial approval from the bank; which was received for all of the above mentioned dividends.
|
NOTE 12:- |
TAXES ON INCOME
|
a. |
Israeli taxation:
|
1. |
Corporate tax rates:
|
2. |
Tax benefits under the Law for the Encouragement of Capital Investments, 1959 (the "Law"):
|
NOTE 12:- |
TAXES ON INCOME (Cont.)
|
3. |
On November 15, 2021, the Israeli Parliament released its 2021-2022 Budget Law (“2021 Budget Law”). The 2021 Budget Law introduces a new dividend ordering rule that apportions every dividend between previously tax-exempt (“Trapped Earnings”) and previously taxed income. Consequently, distributions (including deemed distributions as per Section 51(h)/51B of the Law) may entail additional corporate tax liability to the distributing company. The Company had approximately $
|
b. |
Taxes on income on non-Israeli subsidiaries:
|
NOTE 12:- |
TAXES ON INCOME (Cont.)
|
c. |
Carryforward tax losses and credits:
|
NOTE 12:- |
TAXES ON INCOME (Cont.)
|
d. |
Deferred taxes:
|
December 31,
|
|||||||||
2022
|
2021*)
|
|
|||||||
1.
|
Provided in respect of the following:
|
||||||||
Gross deferred tax assets:
|
|||||||||
Carryforward tax losses and credits **) ***)
|
$
|
|
$
|
|
|||||
Property, equipment and intangibles
|
|
|
|||||||
Inventory accrual
|
|
|
|||||||
Vacation accrual
|
|
|
|||||||
Supplementary tax advances
|
|
|
|||||||
Deferred revenues
|
|
|
|||||||
Research and development costs
|
|
|
|||||||
Other temporary differences
|
|
|
|||||||
Gross deferred tax assets
|
|
|
|||||||
Valuation allowance
|
(
|
)
|
(
|
)
|
|||||
Net deferred tax assets
|
|
|
|||||||
Gross deferred tax liabilities:
|
|||||||||
Property and equipment
|
(
|
)
|
(
|
)
|
|||||
Other temporary differences
|
(
|
)
|
(
|
)
|
|||||
Gross deferred tax liabilities
|
(
|
)
|
(
|
)
|
|||||
Net deferred tax assets
|
$
|
|
$
|
|
*) |
Reclassified
|
**) |
|
***) |
|
NOTE 12:- |
TAXES ON INCOME (Cont.)
|
December 31,
|
|||||||||
2022
|
2021
|
||||||||
2.
|
Deferred taxes are included in the consolidated balance sheets, as follows:
|
||||||||
Long-term assets
|
$
|
|
$
|
|
3. |
The Peruvian government awarded GNP, the Company's subsidiary in Peru, the Regional Pronatel Projects under six separate bids for the construction of fiber and wireless networks and operation of the networks for a defined period. The income derived from the construction and operation of the projects is a tax-exempt subsidy. |
4. |
During the year ended December 31, 2022, the Company increased valuation allowance by $
|
5. |
The functional and reporting currency of the Company and most of its subsidiaries is the U.S. dollar. The difference between the annual changes in the NIS/Dollar exchange rate causes a further difference between taxable income and the income before taxes on income shown in the consolidated financial statements. In accordance with ASC 740, the Company has not provided deferred taxes on the difference between the functional currency and the tax basis of assets and liabilities.
|
NOTE 12:- |
TAXES ON INCOME (Cont.)
|
e. |
Reconciling items between the statutory tax rate of the Company and the actual taxes on income: |
Year ended December 31,
|
||||||||||||
2022
|
2021*)
|
|
2020*)
|
|
||||||||
Income before taxes on income (tax benefit), as reported in the consolidated statements of income (loss)
|
$
|
|
$
|
|
$
|
|
||||||
Statutory tax rate
|
|
%
|
|
%
|
|
%
|
||||||
Theoretical taxes on income
|
$
|
|
$
|
|
$
|
|
||||||
Currency differences
|
|
|
|
|
||||||||
Tax adjustment in respect of different tax rates and "Benefitted Enterprise" status
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Changes in valuation allowance
|
|
|
(
|
)
|
||||||||
Capital (gain) loss from merger, acquisition and related litigation expense, net
|
|
|
(
|
)
|
||||||||
Expiration of carryforward tax losses
|
|
|
|
|||||||||
Exempt subsidy income
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Release of trapped earnings
|
|
|||||||||||
Nondeductible expenses and other differences
|
|
|
|
|||||||||
$
|
|
$
|
|
$
|
|
f. |
Taxes on income (tax benefits) included in the consolidated statements of income (loss):
|
Year ended December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Current
|
$
|
|
$
|
|
$
|
|
||||||
Deferred
|
(
|
)
|
|
(
|
)
|
|||||||
$
|
|
$
|
|
$
|
|
NOTE 12:- |
TAXES ON INCOME (Cont.)
|
Year ended December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Domestic
|
$
|
|
$
|
|
$
|
|
||||||
Foreign
|
|
|
|
|||||||||
$
|
|
$
|
|
$
|
|
g. |
Income (loss) before taxes on income:
|
Year ended December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Domestic
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||
Foreign
|
|
|
(
|
)
|
||||||||
$
|
|
$
|
|
$
|
|
h. |
Unrecognized tax benefits:
|
December 31,
|
||||||||
2022
|
2021*)
|
|
||||||
Balance at beginning of year
|
$
|
|
$
|
|
||||
Increase (decrease) in tax positions for prior years, net
|
(
|
)
|
|
|||||
Increase in tax positions for current year
|
|
|
||||||
Balance at the end of year **)
|
$
|
|
$
|
|
**) |
|
NOTE 12:- |
TAXES ON INCOME (Cont.)
|
i. |
The Company and its subsidiaries file income tax returns in Israel and in other jurisdictions of its subsidiaries. The Company's Israeli tax assessments through 2019 are considered final. As of December 31, 2022, the tax returns of the Company’s main subsidiaries are still subject to audits by the tax authorities for the tax years 2017 through 2021.
|
NOTE 13:- |
SUPPLEMENTARY CONSOLIDATED BALANCE SHEETS INFORMATION
|
a. |
Other current assets:
|
December 31,
|
||||||||
2022
|
2021
|
|||||||
Governmental authorities
|
$
|
|
$
|
|
||||
Prepaid expenses
|
|
|
||||||
Deferred charges
|
|
|
||||||
Advance payments to suppliers
|
|
|
||||||
Other
|
|
|
||||||
$
|
|
$
|
|
b. |
Other current liabilities:
|
December 31, |
||||||||
2022 |
2021 | |||||||
Payroll and related employee accruals
|
$
|
|
$
|
|
||||
Governmental authorities
|
|
|
||||||
Deferred rent income
|
|
|
||||||
Other
|
|
|
||||||
$
|
|
$
|
|
c. |
Other long-term liabilities:
|
December 31,
|
||||||||
2022
|
2021
|
|||||||
Long-term governmental authorities
|
$
|
|
$
|
|
||||
Other
|
|
|
||||||
$
|
|
$
|
120
|
NOTE 14:- SELECTED CONSOLIDATED STATEMENTS OF INCOME (LOSS) DATA
a.Financial expenses, net:
Year ended December 31, |
||||||||||||
2022 |
2021 |
2020 |
||||||||||
Income: |
||||||||||||
|
||||||||||||
Interest on cash equivalents, short-term deposits and restricted cash |
$ |
|
$ |
|
$ |
|
||||||
Other |
|
|
|
|||||||||
|
||||||||||||
|
|
|
||||||||||
Expenses: |
||||||||||||
|
||||||||||||
Interest with respect to bank loans |
|
|
|
|||||||||
Exchange rate differences, net |
|
|
|
|||||||||
Bank charges including guarantees |
|
|
|
|||||||||
Other |
|
|
|
|||||||||
|
||||||||||||
|
|
|
||||||||||
|
||||||||||||
Total financial expenses, net |
$ |
|
$ |
|
$ |
|
b.Earnings (losses) per share:
The following table sets forth the computation of basic and diluted earnings (losses) per share:
1.Numerator:
Year ended December 31, |
||||||||||||
2022 |
2021 |
2020 |
||||||||||
Numerator for basic and diluted earnings (losses) per share - |
||||||||||||
Net income (losses) available to holders of ordinary shares |
$ |
( |
) |
$ |
( |
) |
$ |
|
F - 51
GILAT SATELLITE NETWORKS LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share data)
NOTE 14:- SELECTED CONSOLIDATED STATEMENTS OF INCOME (LOSS) DATA (Cont.)
2.Denominator (in thousands):
Year ended December 31, |
||||||||||||
2022 |
2021 |
2020 |
||||||||||
Denominator for basic earnings (losses) per share - |
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|
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Weighted average number of shares |
|
|
|
|||||||||
Add - employee stock options |
|
|
|
|||||||||
|
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Denominator for diluted earnings (losses) per share - adjusted weighted average shares assuming exercise of stock options |
|
|
|
NOTE 15:- CUSTOMERS, GEOGRAPHIC AND SEGMENT INFORMATION
The Company applies ASC 280, "Segment Reporting" ("ASC 280"). Operating segments are defined as components of an enterprise for which separate financial information is available and is evaluated regularly by the chief operating decision maker ("CODM"). The CODM is the Company’s Chief Executive Officer. The Company's CODM does not regularly review asset information by segments and, therefore, the Company does not report asset information by segment.
From 2018 until December 31, 2021, The Company had three operating segments: Fixed Networks, Mobility Solutions and Terrestrial Infrastructure Projects.
Commencing in the first quarter of 2022, to reflect the Company’s new management’s approach to the management of the Company’s operations, organizational alignment, customer base and end markets, the Company operates in three operating segments, as follows:
Satellite Networks is focused on developing and supplying networks that are used as the platform that enables the latest satellite constellations of high throughput satellites (“HTS”), very high throughput satellites (“VHTS”) and Non-GEO-Stationary Orbit (“NGSO”) opportunities worldwide. The segment provides advanced broadband satellite communication networks and associated professional services and comprehensive turnkey solutions and managed satellite network services solutions. Segment’s customers are service providers, satellite operators, MNOs, Telcos, large enterprises, system integrators, defense, homeland security organizations and governments worldwide. Principal applications include In-Flight-Connectivity, cellular backhaul, maritime, social inclusion solutions, government, defense and enterprise networks and are driving meaningful partnerships with satellite operators to leverage the segment’s technology and breadth of services to deploy and operate the ground-based satellite communication networks. The segment’s product portfolio includes a leading satellite network platform with high-speed VSATs, high performance on-the-move antennas, BUCs and transceivers.
F - 52
GILAT SATELLITE NETWORKS LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 15:- CUSTOMERS, GEOGRAPHIC AND SEGMENT INFORMATION (cont.)
Integrated Solutions is focused on developing, manufacturing and supplying products and solutions for mission-critical defense and broadcast satellite communications systems, advanced on-the-move and on-the-pause satellite communications equipment, systems and solutions, including airborne, ground-mobile satellite systems and solutions. The integrated solutions product portfolio comprises of leading high-efficiency, high-power SSPAs, BUCs and transceivers with a field-proven, high-performance variety of frequency bands. The segment’s customers are satellite operators, In-Flight Connectivity service providers, defense and homeland security system integrators, and NGSO gateway integrators.
Network Infrastructure and Services is focused on telecom operation and implementation of large-scale network projects in Peru. The segment provides terrestrial (fiber optic and wireless network) and satellite network construction and operation. The segment serves the Company’s customers through technology integration, managed networks and services, connectivity services, internet access and telephony over the segment’s networks. The segment implements projects using various technologies (including the Company’s equipment), mainly based on BOT and BOO contracts.
The Company evaluated whether the change in its operating segments, as described above, affects goodwill assignment to reporting units and concluded no re-assignment is needed.
a.Information on the reportable operating segments:
1.All the above segments changes were reflected through retroactive revision of prior period segment information.
2.The measurement of operating profit (loss) in the reportable operating segments is based on the same accounting principles applied in these consolidated financial statements and includes certain corporate overhead allocations.
F - 53
GILAT SATELLITE NETWORKS LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 15:- CUSTOMERS, GEOGRAPHIC AND SEGMENT INFORMATION (cont.)
3.Financial information relating to reportable operating segments:
Year ended December 31, 2022 |
||||||||||||||||||||
Satellite Networks |
Integrated Solutions |
Network Infrastructure and Services |
Unallocated |
Total |
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|
||||||||||||||||||||
Revenues |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
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Cost of revenues |
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Gross profit |
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Research and development, net |
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Selling and marketing |
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General and administrative |
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Impairment of held for sale asset |
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Operating income (loss) |
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( |
) |
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Financial expenses, net |
|
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Income before taxes on income |
|
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|
||||||||||||||||||||
Depreciation and amortization |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
Year ended December 31, 2021 |
||||||||||||||||||||
Satellite Networks |
Integrated Solutions |
Network Infrastructure and Services |
Unallocated |
Total |
||||||||||||||||
|
||||||||||||||||||||
Revenues |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
Cost of revenues |
|
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|
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Gross profit |
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Research and development, net |
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Selling and marketing |
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General and administrative |
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Impairment of held for sale asset |
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|
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Operating income (loss) |
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( |
) |
( |
) |
|
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Financial expenses, net |
|
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|
||||||||||||||||||||
Income before taxes on income |
|
|||||||||||||||||||
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||||||||||||||||||||
Depreciation and amortization |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
F - 54
GILAT SATELLITE NETWORKS LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 15:- CUSTOMERS, GEOGRAPHIC AND SEGMENT INFORMATION (cont.)
Year ended December 31, 2020 |
||||||||||||||||||||
Satellite |
Integrated Solutions |
Network and Services |
Unallocated |
Total |
||||||||||||||||
|
||||||||||||||||||||
Revenues |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
Cost of revenues |
|
|
|
|
|
|||||||||||||||
|
||||||||||||||||||||
Gross profit |
|
|
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|
|
|
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|
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Research and development, net |
|
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Selling and marketing |
|
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|||||||||||||||
General and administrative |
|
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|
|
|||||||||||||||
Merger, acquisition and related litigation expenses (income), net |
|
|
|
( |
) |
( |
) |
|||||||||||||
|
||||||||||||||||||||
Operating income (loss) |
( |
) |
( |
) |
( |
) |
|
|
|
|||||||||||
Financial expenses, net |
|
|||||||||||||||||||
|
||||||||||||||||||||
Income before taxes on income |
$ |
|
||||||||||||||||||
|
||||||||||||||||||||
Depreciation and amortization |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
b.Geographic information:
Revenues attributed to geographic areas, based on the location of the end customers and in accordance with ASC 280, are as follows (*):
Year ended December 31, |
||||||||||||
2022 |
2021 |
2020 |
||||||||||
|
||||||||||||
United States |
$ |
|
$ |
|
$ |
|
||||||
Peru |
|
|
|
|||||||||
Israel |
|
|
|
|||||||||
Others |
|
|
|
|||||||||
|
||||||||||||
$ |
|
$ |
|
$ |
|
*) Reclassified.
F - 55
GILAT SATELLITE NETWORKS LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 15:- CUSTOMERS, GEOGRAPHIC AND SEGMENT INFORMATION (cont.)
c.The Company's long-lived assets (property and equipment, net and operating lease right-of-use assets) are located as follows(*):
December 31, |
||||||||
2022 |
2021 |
|||||||
|
||||||||
Israel |
$ |
|
$ |
|
||||
United States |
|
|
||||||
Peru |
|
|
||||||
Other |
|
|
||||||
|
||||||||
$ |
|
$ |
|
*) Reclassified.
d.The table below represents the revenues from major customers and their segments:
Year ended December 31, |
||||||||||||
2022 |
2021 |
2020 |
||||||||||
Customer A – Network Infrastructure and Services |
|
% |
|
% |
|
% |
||||||
Customer B – Integrated Solutions |
|
% |
|
% |
|
) |
||||||
Customer C – Integrated Solutions |
|
) |
|
) |
|
% |
*)
Customer A is located in Peru, Customers B and C are located in the United States.
NOTE 16:- RELATED PARTY BALANCES AND TRANSACTIONS
a.The Company entered into a number of agreements for the purchase of infrastructure, construction and services from C. Mer Industries Ltd. ("C. Mer"), a publicly traded company in Israel (TASE). As of December 31, 2022, the Company's former largest shareholder, FIMI Opportunity Funds ("FIMI"), holds approximately
b.In December 2015 the Company entered into a memorandum of understanding with Orbit Communication Systems, ("Orbit"), a publicly traded company in Israel (TASE), for development and manufacture of an antenna for an aggregate amount of approximately $
In addition, Euclid Ltd. ("Euclid"), a supplier of the Company, was fully acquired by Orbit in January 2022. The Company purchases antennas and related services from Euclid.
F - 56
GILAT SATELLITE NETWORKS LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 16:- RELATED PARTY BALANCES AND TRANSACTIONS (Cont.)
c. |
As of December 31, 2022, FIMI holds less than
|
d. |
The transactions with the Company’s related parties were approved by the Company’s Audit Committee and Board of Directors in accordance with the requirements of the Israeli Companies Law.
|
e. |
Transactions with the related parties:
|
Year ended December 31,
|
||||||||||||
2022
|
2021
|
2020
|
||||||||||
Cost of revenues of products
|
$
|
|
$
|
|
$
|
|
||||||
Purchase of property and equipment and inventory
|
$
|
|
$
|
|
$
|
|
f. |
Balances with the related parties:
|
December 31,
|
||||||||
2022
|
2021
|
|||||||
Accrued expenses
|
$
|
|
)
|
$
|
|
|||
Trade payables
|
$
|
|
)
|
$
|
|
NOTE 17:- |
SUBSEQUENT EVENTS
|
a. |
On March 8, 2023, the Company signed a definitive agreement to acquire
|
b. |
On March 10, 2023, it was announced that Silicon Valley Bank (“SVB”) in the United States was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. According to the FDIC, all insured depositors of SVB will have full access to their insured deposits no later than Monday morning, March 13, 2023. The Company's U.S. subsidiary held a balance of approximately $
|
F - 57