<SEC-DOCUMENT>0001178913-12-002329.txt : 20120816
<SEC-HEADER>0001178913-12-002329.hdr.sgml : 20120816
<ACCEPTANCE-DATETIME>20120816070924
ACCESSION NUMBER:		0001178913-12-002329
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20120816
FILED AS OF DATE:		20120816
DATE AS OF CHANGE:		20120816

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GILAT SATELLITE NETWORKS LTD
		CENTRAL INDEX KEY:			0000897322
		STANDARD INDUSTRIAL CLASSIFICATION:	RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-21218
		FILM NUMBER:		121038721

	BUSINESS ADDRESS:	
		STREET 1:		C/O GILAT SATELLITE NETWORKS INC
		STREET 2:		1651 OLD MEADOW RD
		CITY:			MCLEAN
		STATE:			VA
		ZIP:			22102
		BUSINESS PHONE:		7037349401

	MAIL ADDRESS:	
		STREET 1:		GILAT HOUSE YEGIA KAPAYIM STREET
		STREET 2:		DANIV PARK
		CITY:			KIRYAT ARYE PETAH TI
		STATE:			L3
		ZIP:			00000
</SEC-HEADER>
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<TYPE>6-K
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Washington, D.C. 20549</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Pursuant to Rule 13a &#8211; 16 or 15d &#8211; 16</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">of the Securities Exchange Act of 1934</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">For the Month of August 2012</font><br>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Gilat House, Yegia Kapayim Street</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Form 20-F&#160;<font style="DISPLAY: inline;" face="Wingdings">x<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font></font>Form 40-F&#160;<font style="DISPLAY: inline;" face="Wingdings">o</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Yes&#160;<font style="DISPLAY: inline;" face="Wingdings">o<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font></font>No&#160;<font style="DISPLAY: inline;" face="Wingdings">x</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">If &#8220;Yes&#8221; is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">N/A</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Attached hereto is the script related to Registrant&#8217;s conference call held on August 15, 2012 after the announcement of Registrant's results for the second quarter 2012.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We consent to the incorporation by reference in the Registration Statements on Form F-3 (Registration Nos. 333-160683 and No. 333-174142) and the Registration Statements on Form S-8 (Registration Nos. 333-96630, 333-113932, 333-123410, 333-132649, 333-158476 and 333-180552).</font></div>

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<font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Operator</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Ladies and gentlemen, thank you for standing by. Welcome to the Gilat second-quarter 2012 results conference call. All participants are at present in listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. (Operator Instructions).</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">I would now like to turn over the call to Phil Carlson from KCSA Strategic Communications to read the safe harbor. Phil, please go ahead.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Phil Carlson - KCSA Strategic Communications - IR</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Thank you. Good morning and good afternoon, everyone. Thank you for joining us today for Gilat's second quarter 2012 results conference call. A recording of this call will be available beginning at approximately noon Eastern Time today, August 15, until August 17, 2012, at noon.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our earnings press release and website provide details on accessing the archived call. Investors are urged to read the forward-looking statements in our earnings releases, which state that statements made on this earnings call which are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">All forward-looking statements, including statements regarding future financial operating results, involve risks, uncertainties and contingencies, many of which are beyond the control of Gilat and which may cause actual results to differ materially from anticipated results.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Gilat is under no obligation to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise. We expressly disclaim any obligation to do so. More detailed information about risk factors can be found in our reports filed with the Securities and Exchange Commission.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">That said, on the call today is Erez Antebi, Gilat's Chief Executive Officer, and Yaniv Reinhold, Chief Financial Officer. Erez, please go ahead.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Erez ANTEBI - Gilat Satellite Networks Ltd. - CEO</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Thank you Phil and good day everyone. I would like to begin by providing a high-level overview of the second quarter and then offer additional insight on some of the strong progress we made this quarter. Following my comments, Yaniv will discuss our financial results for the quarter.&#160;&#160;I will then summarize and open the call for questions.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The second quarter was a solid one for Gilat, a marked improvement over the first quarter of the year, and we are optimistic about our prospects going forward. Our financial performance was strong, with revenues increasing 11.4%, from $76.6 million in the first quarter to $85.3 million this quarter, with EBITDA reaching $8.6 million or 10.1% of revenues.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Operationally, our organizational changes continue to bear fruit as we work to improve efficiencies and reduce operational expenses. On a non-GAAP basis, our operating income was $4.8 million in the second quarter of 2012 compared to an operating loss of $0.3 million in the first quarter of this year.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">I am also pleased to report that in the second quarter we generated cash from operations of $3.2 million.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Yaniv will provide you with more details on our quarterly results later in the call.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">I will now discuss some of our business highlights for the quarter, starting with our Commercial Division.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our <font style="DISPLAY: inline; FONT-WEIGHT: bold">Commercial Division</font> continued to perform well and revenues are on track for the year. We have seen in this quarter a stronger than expected rate of implementation at NBN Co in Australia. As a reminder, last year we signed an agreement with Optus Networks to provide hubs, VSATs, site installation and network operations for the Australian Government's NBN Co Interim Satellite Service.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We are pleased to announce that Gilat has successfully completed the deployment of the first 10,000 VSATs. The project is moving forward ahead of schedule as increased demand is driving a faster than expected network rollout. As such, while the initial commitment was for a network of 20,000 VSAT's, the network may grow to as much as 48,000 sites by late 2015. Our customer is very satisfied with the implementations and support it has received to date.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Building on our previous success and credibility in various market segments, we continue to focus our efforts on supplying products and solutions in vertical markets such as Oil &amp; Gas and cellular. We also continue to provide both new and existing customers with enterprise solutions.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">For example, in the Americas, we continue to expand upon our relationship with Cable and Wireless Panama, Panama&#8217;s largest telecommunications operator.&#160;&#160;Cable and Wireless has been a partner since 2005, and they recently signed a network expansion that includes solar powered VSATs as well as installation, maintenance and operation of the SkyEdge II hub equipment and VoIP gateways.<font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Another example comes from Argentina&#8217;s Servicio Satelital which chose our SkyEdge II hub and broadband satellite platform to upgrade its existing network and provide additional support to hundreds of new sites with broadband internet and data connectivity.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our <font style="DISPLAY: inline; FONT-WEIGHT: bold">Ka-band initiatives</font> are also well underway and our pipeline is growing nicely. These initiatives are starting to take form and we expect to see Ka revenue growth from 2013 onward. In preparation for the planned Ka satellite launches in the second half of the year and beyond, we continue to make great strides technologically with our VSAT equipment. In fact, our SkyEdge II-c Aries VSAT was recently awarded the renowned Bronze A' Design Award.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The SkyEdge II-c is our newly developed Ka-band consumer terminal which will be used to support SES Broadband's satellite-based Internet service, as well as other Ka satellite services upon deployment. In fact, we are seeing market interest in other applications of Ka-band in addition to the consumer market, such as IP trunking and satellite-on-the-move.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">With our highly advanced communications equipment and versatile technology enabling multiple applications, coupled with our flexibility in meeting both technical and business requirements, and our strong pipeline, we believe we are well positioned to take advantage of the Ka-band satellite growth going forward.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">As we turn our attention to our <font style="DISPLAY: inline; FONT-WEIGHT: bold">Defense Division</font>, I am pleased to inform you that we are beginning to see more traction in this area. While I am not able to delve into the specific contracts or programs we are targeting, I can say that our pipeline is growing and we are pursuing both U.S. and international programs.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We saw good traction in our satellite-on-the-move business this quarter with initial sales to new customers of our low profile RaySat antennas in Russia, China, Israel and Mexico. We continue to work to penetrate these and other markets, and expect follow on orders to these initial implementations.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In addition to these sales, some of you may have seen our low profile antenna integrated on a US Army all-terrain vehicle in an article published in Satnews Daily, dated August 1. The article discusses the Mission Command-on-the-Move systems being deployed for the U.S. Army 2nd Infantry Division in South Korea.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We also continue to see substantial interest and significant prospects within the Airborne and Maritime verticals for our <font style="DISPLAY: inline; FONT-WEIGHT: bold">Wavestream products</font>.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In the <font style="DISPLAY: inline; FONT-WEIGHT: bold">Airborne Vertical</font>, we received Commercial FAA Certification for our Wavestream AeroStream Transceiver earlier this year. In addition, we closed several deals with leading system integrators who provide satellite broadband services to commercial airlines. They are integrating our Wavestream amplifiers as part of their solutions for in-flight satellite connectivity.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We see the airborne market as an attractive opportunity for Gilat. Airlines today are looking to higher bandwidth solutions to add to the passenger experience and to generate additional revenues, and we are well positioned to provide the necessary technology for these applications. To give you a feel for the market, In-Stat research estimates that the total number of broadband-enabled planes in 2011 was 1,835. They forecast that in-flight Wi-Fi broadband deployments will surpass 6,100 planes worldwide in 2015.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In another segment of the airborne market, we introduced last week our integrated solution for the UAV market. The lightweight, miniature dimensions of our solution addresses the defense and military market's critical need to broadcast high broadband data from increasingly smaller UAVs. In order to do so, those UAVs can only carry the smallest, lightest and lowest possible power consuming communications solutions.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In the <font style="DISPLAY: inline; FONT-WEIGHT: bold">Maritime Vertical</font> we recently announced a significant win for our Wavestream products, as our Ku-band solid state power amplifiers were selected by Harris CapRock Communications for integration into end-to-end VSAT antenna systems onboard Royal Caribbean cruise ships.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In addition to these successes, Wavestream continues to provide amplifiers to a major U.S. systems integrator who is providing mobile and transportable satellite ground communication systems as part of a program of record.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">During this quarter we have made good progress towards integrating the operational systems at Wavestream and RAS into Gilat&#8217;s systems. We expect the full integration to be completed during 2013. Upon completion, we expect all of our business divisions to leverage these streamlined systems, which will facilitate revenue growth and decrease expenses as we increase our efficiencies across the board.</font><br>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Finally, we look at our <font style="DISPLAY: inline; FONT-WEIGHT: bold">Services</font> <font style="DISPLAY: inline; FONT-WEIGHT: bold">Division</font>.&#160;&#160;Our Services business in Colombia and Peru continue to perform, driven by the ongoing implementation of the school project in Colombia we secured in early 2012 and the Compartel contract extension. In addition, we have successfully finalized the installation phase of FITEL 10 in Peru.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Spacenet is continuing to gain credence for its Connect Series - a set of tiered managed network services - introduced early in the quarter. The series has already secured seven new customer wins including Gannett (the owner of USA Today), Perkins, JCrew and Nordstrom retail chains, and is continuing to make headway with several new prospective customers coming on board in the coming quarter.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our pipeline for the second half of the year is solid and we are encouraged by the deals that we have seen so far.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">That concludes our business overview. I would now like to turn the call over to Yaniv Reinhold, our CFO, who will review the financials. Yaniv, please?</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Yaniv REINHOLD - Gilat Satellite Networks Ltd. - CFO</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Thanks, Erez and hello everyone. I would like to remind everyone that our financial results are presented both on a GAAP and non-GAAP basis. The GAAP financial results include the effect of non-cash stock options expenses as per ASC 718, one time other income, expenses related to our M&amp;A activities during 2010 and 2011, and amortization of intangible assets resulting from the purchase price allocation.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The reconciliation table in our press release highlights this data, and our non-GAAP information is presented excluding these items.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Now moving to our financial highlights for the second quarter of 2012 -- Revenues for the second quarter of 2012 were $85.3 million, compared to $81.7 million for the same period in 2011. The increase is primarily due to a strong quarter from our Commercial division driven by the higher level of revenues from the NBN project in Australia.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our gross margin this quarter was approximately 32% compared to approximately 36% in the second quarter of 2011. On a non-GAAP basis, our gross margin was approximately 34% compared to approximately 38% in the comparable period last year. As we have mentioned in the past, our gross margin is affected quarter to quarter by the regions in which we operate and the types of deals we recognize. The decrease in gross margin this quarter was primarily due to the mixture of deals involving system integration that were closed by our commercial division. We expect the gross margin to improve over time.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Gross R&amp;D expenses were $8.4 million this quarter compared to $8.9 million in the same quarter of 2011. The decrease in R&amp;D expenses reflects our integration efforts and growing synergies within the divisions. We are continuing to invest substantial funds in R&amp;D in support of our strategy in Ka and Defense.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Selling and marketing expenses for the quarter decreased to $9.6 million compared to $12.1 million for the same quarter last year. The decrease is attributed to a lower level of fixed expenses, and variable expenses associated with the deals we secured this quarter.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">General and administrative expenses for the quarter decreased to $8.3 million compared to $9.5 million for the same quarter last year. The decrease primarily came from continued streamlining of processes connected to our continued integration of Wavestream and RAS, as well as from tighter budget control and reduction of expenses in certain areas.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our GAAP operating income for the quarter was $2.4 million compared to operating income of $0.2 million in the second quarter of 2011.&#160;&#160;On a non-GAAP basis, operating income was $4.8 million in the second quarter of 2012 compared to operating income of $2.7 million in the comparable quarter of 2011.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">GAAP net income for the quarter was $0.9 million or $0.02 per diluted share similar to the net income of $0.9 million or $0.02 per diluted share in the same quarter of 2011. On a non-GAAP basis, net income for the quarter was $3.2 million or $0.07 per diluted share compared to net income of $2.6 million or $0.06 per diluted share in the same quarter of 2011.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our trade receivables at the end of the quarter were $58.2 million representing a DSO of 61 days. DSO fluctuates with revenue and the terms and conditions of deals closed.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">As of June 30<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">th</font>, 2012, our total cash balances, including restricted cash, net of short-term bank credits, amounted to $62.0 million.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our total debt was $64.9 million, which was comprised mostly of debt in the amount of $36 million to be paid over the next nine years.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our shareholders' equity at the end of the quarter totaled $259.7 million.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">This concludes our financial review for the quarter, and I would now like to turn the call back to Erez. Erez?</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Erez ANTEBI - Gilat Satellite Networks Ltd. - CEO</font></div>

<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Thank you, Yaniv. Before we conclude today&#8217;s call and turn to your questions, I would like to reiterate our view of the second quarter performance and our prospects going forward.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">As I mentioned previously, our performance in the second quarter was a solid and marked improvement both over the first quarter of 2012 and over the second quarter of 2011 in terms of revenue growth, operating income and cash generation. We continue to improve efficiencies and reduce operational expenses, with tight spending controls in place.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We are confident about our prospects going forward especially given the fact that historically, the second half of the year is typically the stronger period for Gilat. These factors give us confidence that we will achieve our stated objectives for 2012.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">That concludes our review. We would now like to open the floor for questions. Operator, please?</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Erez ANTEBI - Gilat Satellite Networks Ltd. - CEO</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">I&#8217;d like to thank everyone for your time today. We appreciate your joining us on the call. I hope we were able to give you a good understanding of the results at hand. We appreciate your continued support.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;James Breen <font style="FONT-STYLE: italic; DISPLAY: inline">- William Blair &amp; Company - Analyst</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;Thanks. Just a couple questions about the business and the margins going forward. Based on the guidance for EBITDA for the year, it seems as though you are going to see some margin expansion in the back half. Please talk about what seasons that? Is it a combination of better revenues in conjunction with it seems like R&amp;D expenses were down a bit, and is that something we think could continue? Thanks.</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;I think what we would expect to see in the second half of the year, we would probably expect to see -- typically in the second half, we will see higher revenues than we see in the first half of the year. And we would expect on the expense side that we would expect to see some continued work again on the integration and deficiencies. So I would expect to see some improvement there as well.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;Okay. And then generally in the third quarter, do you see a rebound from the Department of Defense that will help Wavestream sales just because it is the year-end for the government?</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;Erez Antebi <font style="FONT-STYLE: italic; DISPLAY: inline">- Gilat Satellite Networks Ltd.</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;Well, I don't want to comment specifically on the third quarter versus the fourth or something like that, but I think in general you have to bear in mind that in the food chain when the government will typically buy from -- through programs of record from system integrators, and those system integrators will flow orders on to us. So it is not -- at first we are one site removed from the government in that sense, and therefore, we have a little less visibility both on the signing and on the exact amount.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;Okay. Great. And then just lastly on the R&amp;D, it seemed like R&amp;D expenses were down a little bit. Do you think this will continue, or is it more seasonal?</font><br>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">&#160;Andrew Uerkwitz <font style="FONT-STYLE: italic; DISPLAY: inline">- Oppenheimer &amp; Co. - Analyst</font></font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;Thanks, guys. I appreciate you taking my questions. Just two quick ones here. The first, you seem to be incrementally more positive on the defense side and obviously so. But how do you waive that against some of the central budget pressures that the US could see by the end of the year?</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;Great. Thank you. That is helpful. And then around the Australia deal, you shipped 10,000 satellites I think is what you said or that is what the press release indicated. And that's a long-term deal. From a revenue perspective or contract perspective, can I do a simple 10,000 divided by number of expected satellites times the expected deal size? That is what you guys have already booked, or how do I look at that deal going forward?</font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">So and what we have announced is that we have achieved the milestone of installing 10,000 sites, and obviously that network is continuing to grow.</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;Thank you for taking the call, and first, congratulations on an outstanding quarter. The question has to do with the overall world economics as it evolves. It looks like it is rather weak. Would it be a fair statement to make that the offerings that Gilat has offers an opportunity for an increased efficiency and, therefore, not being impacted that much, in fact might even be improved because of the overall worldwide economic situation?</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;I don't think I would go so far as to say that. I think that the offerings that we have, they present an alternative to -- in our Commercial business, they present an alternative to terrestrial broadband where that does not exist. And, therefore, in our commercial business, we are seeing most of our revenues coming from more developing areas of the world -- Latin America, Asia, former CIS, etc., which has I think still a very robust economy.</font></div>

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&#160; <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Mike Cikos <font style="FONT-STYLE: italic; DISPLAY: inline">- Sidoti &amp; Company - Analyst</font></font></div>
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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;Good morning. Congratulations on the quarter, guys. Just a question, I wanted to follow up on the NBN. So you delivered 10,000 VSATs at this point, and you are saying that could grow to 48,000 sites, which would provide an opportunity of about $120 million for you guys. Would the $120 million then be received by, I think in the press release you say the 48,000 sites would be deployed by late 2015? Would you see the $120 million by then as well, or would it come in later based on service or maintenance?</font></div>

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<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;Okay. And then just one more question. On the operating expenses, are you looking to reduce your costs further from where we are now, or is it more that they will just be a smaller percentage of revenue as sales continue to grow?</font></div>

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