Gilat Second Quarter 2012 Conference Call Script 15 August, 2012

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QUESTION AND ANSWER Operator (Operator Instructions). James Breen, William Blair. James Breen - William Blair & Company - Analyst 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&D expenses were down a bit, and is that something we think could continue? Thanks. Erez Antebi - Gilat Satellite Networks Ltd. 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. James Breen - William Blair & Company - Analyst 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? Erez Antebi - Gilat Satellite Networks Ltd. 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. James Breen - William Blair & Company - Analyst Okay. Great. And then just lastly on the R&D, it seemed like R&D expenses were down a little bit. Do you think this will continue, or is it more seasonal? Erez Antebi - Gilat Satellite Networks Ltd. I don't think there is much seasonality here. It is really like Yaniv said during our call, we are doing some efforts to integrate both RaySat Antenna Systems and Wavestream and the Gilat R&D, and in doing that, we are achieving efficiencies. James Breen - William Blair & Company - Analyst Great. Thank you very much. 6
Operator Andrew Uerkwitz, Oppenheimer. Andrew Uerkwitz - Oppenheimer & Co. - Analyst 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? Erez Antebi - Gilat Satellite Networks Ltd. Well, there is no doubt that the overall defense budgets are under pressure from the government side, and we have seen reductions in those. But I think that we have heard -- we have both heard from the Secretary of Defense, and we have seen that in the various appropriations that one of the areas is probably not going to be hurt and actually is bound to be increased as everything that is related to ISR, intelligence, surveillance and reconnaissance, and everything that has to do with special forces. That is the target area where we fit into the defense programs. So I think that actually as the military moves more funding into those areas, we should see actually an improvement over time. Andrew Uerkwitz - Oppenheimer & Co. - Analyst 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? Erez Antebi - Gilat Satellite Networks Ltd. Well, it is probably a bit more complex than that. But I think just to correct you a bit, the deal we have done with NBN is where we provide hubs and VSATs, not the satellites themselves, of course, but the (multiple speakers) down terminals, and we do also do the installation of the CPAs and we also do the network operations. 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. Now we have said in the past that we would expect that the network could potentially grow up to 48,000 sites and that over multiple years that should or could present a revenue potential to Gilat of $120 million. So and it is not exactly linear, but I think you can do perhaps some extrapolation from that. Andrew Uerkwitz - Oppenheimer & Co. - Analyst Okay. Excellent. I appreciate it. I appreciate the color. Thank you, guys. Operator Gunther Karger, Discovery Group. 7
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Gilat Second Quarter 2012 Conference Call Script 15 August, 2012

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