RRST (MM)

Highest Quarter Performance in Company History OMER, Israel, May 8 /PRNewswire-FirstCall/ -- Main Highlights (compared to first quarter 2006) - Revenues increased 41% to $13.3 million - Adjusted net income up 83% to $2.7 million, or $0.16 per share - GAAP net income up 68% to $2.6 million, or $0.15 per share - Adjusted EBITDA up 28% reaching $3.5 million RRSat Global Communications Network Ltd. (NASDAQ:RRST), a rapidly growing provider of comprehensive content management and global distribution services to the television and radio broadcasting industries, today announced its financial results for the three months ended March 31, 2007. Revenues for the first quarter of 2007 totaled $13.3 million, an increase of 40.9% compared to $9.4 million in the first quarter of 2006. Operating income for the first quarter of 2007 totaled $2.7 million, a 22.6% increase compared to $2.2 million, as reported in the first quarter of 2006. Adjusted net income for the first quarter of 2007 totaled $2.7 million, or 20.4% of revenues, an increase of 83.2% compared to $1.5 million, or 15.7% of revenues, in the first quarter of 2006. Adjusted net income per diluted share totaled $0.16, compared to $0.11 in the first quarter of 2006. Adjusted EBITDA for the first quarter of 2007 totaled $3.5 million, an increase of 28.4% compared to $2.7 million in the first quarter of 2006. Net income on a GAAP basis for the first quarter of 2007 was $2.6 million, or 19.8% of revenues, an increase of 68.2% compared to $1.6 million, or 16.6% of revenues, in the first quarter of 2006. Net income per diluted share on a GAAP basis was $0.15, compared with $0.12 in the first quarter of 2006. David Rivel, CEO of RRSat commented, "We start 2007 with another strong quarter for the company in terms of record top and bottom line performance, and the best in the company's history. We experienced strong double digit growth and healthy cash generation, which provide us with the necessary resources to continue to grow and take the company to the next level." Mr. Rivel added, "During the first quarter we commenced 17 new contracts - 8 of which were with new customers that chose RRSat to extend their global reach, and 9 with existing customers that expanded service offerings to take advantage of our broad global satellite network to transmit their channels to new regions and households spanning the globe. This quarter was also a key quarter in terms of further enhancing and broadening our offering as we signed several new partnerships with leading satellite organizations in Europe, the US and Asia, and laid additional fiber infrastructure in key locations such as Moscow, New York and Washington DC." "Looking ahead, we expect the remainder of 2007 to continue to be an exciting year for RRSat in terms of strong organic growth, as well as potential for new and diverse complementary growth opportunities in the US and Europe, through potential acquisitions and partnerships. We are increasing our annual 2007 revenue guidance to the range of $55.5 - $56.0 million, with second quarter revenues expected to be in the range of $13.5 - $13.8 million," concluded Mr. Rivel Conference Call Information Conference call scheduled later today, May 8, 2007 at 10am EST. On the call, Mr. David Rivel, Founder & CEO and Mr. Gil Efron, CFO will review and discuss the results and will be available to answer investor questions. To participate, please call one of the following teleconferencing numbers. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number. US Dial-in Number: +1-888-668-9141 UK Dial-in Numbers: 0-800-917-5108 Israel Dial-in Number: 03-918-0610 International Dial-in Number: +972-3-918-0610 A replay of the call will be available from the day after the call. The link to the replay will be accessible from RRSat's website at: http://www.rrsat.com/. In addition, a telephone replay of the call will be available for two days following the call. The replay numbers are: +1-888-254-7270 (US); 0-800-917-4256 (UK) and +972-3-925-5927 (International). Use of Non- GAAP Financial Measures RRSat uses two financial measures, adjusted net income and adjusted EBITDA, which are non-GAAP financial measures. RRSat believes that both non-GAAP financial measures are principal indicators of the operating and financial performance of its business. Adjusted net income is calculated based on the net income in our financial statements excluding non-cash equity-based compensation charges recorded in accordance with SFAS 123R, the non-cash income (loss) reflecting changes in the fair value of embedded currency conversion derivatives resulting from the application of SFAS 133 and the resulting income tax (increase) decrease, and one-time expenses in the fourth quarter of 2006 relating to the IPO. Adjusted EBITDA is calculated by deducting from net income interest and marketable securities income, currency fluctuation and other financial income (expenses), net, changes in fair value of embedded currency conversion derivatives, other income (expenses), net, and adding income taxes and one-time expenses in the fourth quarter of 2006 relating to the IPO, non-cash equity-based compensation charge, and depreciation and amortization. Management believes the non-GAAP financial measures (adjusted net income and adjusted EBITDA) provided are useful to investors' understanding and assessment of RRSat's on-going core operations and prospects for the future. Management uses these non-GAAP financial measures in order to evaluate the performance of the company. However, such measures should not be considered in isolation or as substitutes for results prepared in accordance with GAAP. In addition, RRSat's adjusted EBITDA may not be comparable to adjusted EBITDA as reported by other companies. Reconciliations of the non-GAAP measures (adjusted net income and adjusted EBITDA) to net income, the most comparable GAAP measure, are provided in the schedules attached to this release. About RRSat Global Communications Network Ltd. RRSat Global Communications Network Ltd. (NASDAQ:RRST) provides global, comprehensive, content management and distribution services to the rapidly expanding television and radio broadcasting industries. Through its proprietary "RRSat Global Network," composed of satellite and terrestrial fiber optic transmission capacity and the public Internet, RRSat is able to offer high-quality and flexible global distribution services for content providers. RRSat's comprehensive content management services include producing and playing out TV content as well as providing satellite newsgathering services (SNG). RRSat concurrently provides these services to more than 365 television and radio channels, covering more than 150 countries. Visit the company's website http://www.rrsat.com/ for more information. Forward Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding (i) the growth of our business and the television and radio broadcasting industries, (ii) our expectation to sell additional services to our existing client base, and (iii) our ability to report future successes. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry as of the date of this press release. The company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements, including the risks indicated in our filings with the Securities and Exchange Commission (SEC). For more details, refer to our SEC filings and the amendments thereto, including our Registration Statement on Form F-1 filed on October 31, 2006 and our Current Reports on Form 6-K. RRSat Global Communications Network Ltd. and its subsidiary company, Consolidated Statements of Operations In thousands, except share data Three months ended Year ended March 31, March 31, December 31, 2007 2006 2006 (Unaudited) (Unaudited) (Audited) Revenues $ 13,275 $ 9,423 $ 43,284 Cost of revenues 8,470 5,913 27,451 Gross profit 4,805 3,510 15,833 Operating expenses Sales and marketing 662 490 1,831 General and administrative 1,435 812 3,588 One time fees associated with the IPO - - 1,000 Total operating expenses 2,097 1,302 6,419 Operating income 2,708 2,208 9,414 Interest and marketable securities income 569 55 450 Currency fluctuation and other financing income, net 8 2 374 Changes in fair value of embedded currency conversion derivatives 28 124 243 Other income, net - - 4 Income before taxes on income 3,313 2,389 10,485 Income taxes 688 828 3,180 Net income $ 2,625 $ 1,561 $ 7,305 Income per ordinary share Basic income per ordinary shares 0.15 0.12 0.53 Diluted income per ordinary share 0.15 0.12 0.53 Weighted average number of ordinary shares used to compute basic income per ordinary share 17,242,300 13,047,300 13,746,467 Weighted average number of ordinary shares used to compute diluted income per ordinary share 17,313,715 13,129,200 13,793,694 RRSat Global Communications Network Ltd and its subsidiary company, Reconciliation of Adjusted Net Income and Adjusted EBITDA Unaudited, in thousands Three months ended Year ended March March December 31, 31, 31, 2007 2006 2006 Reconciliation of Net Income to Adjusted Net Income: Net income - as reported $ 2,625 $ 1,561 $ 7,305 Non-cash equity-based compensation charge 105 3 117 Changes in fair value of embedded currency conversion derivatives (28) (124) (243) Change in deferred tax on embedded derivatives 8 38 71 One time Management fees - - 1,000 Taxes on one time management fees - - (155) Adjusted net income 2,710 1,478 8,095 Three months ended Year ended March March December 31, 31, 31, 2007 2006 2006 Reconciliation of Net Income to Adjusted EBITDA: Net income - as reported $ 2,625 $ 1,561 $ 7,305 Interest and marketable securities (income) (569) (55) (450) Currency fluctuation and other financial (income) expenses, net (8) (2) (374) Changes in fair value of embedded currency conversion derivatives (28) (124) (243) Other expenses (income), net - - (4) Income tax expense 688 828 3,180 One time Management fees - - 1,000 Non-cash equity-based compensation charge 105 3 117 Depreciation and amortization 670 500 2,274 Adjusted EBITDA 3,483 2,711 12,805 RRSat Global Communications Network Ltd. and its subsidiary company, Consolidated Balance Sheets In thousands, except share data March 31, December 31, 2007 2006 (Unaudited) (Audited) Current assets Cash and cash equivalents $ 24,812 $ 51,393 Marketable securities 13,335 1,454 Accounts receivable: Trade (net of provision for doubtful account of $ 1,228 and $ 987 as of March 31, 2007 and December 31, 2006, respectively) 9,450 10,187 Other 964 797 Fair value of embedded currency conversion derivatives 704 743 Related parties 145 64 Deferred taxes 245 184 Prepaid expenses 941 215 Total current assets 50,596 65,037 Deposits and long-term receivables 848 1,018 Marketable securities 16,575 - Assets held for employee severance payments 678 626 Fixed assets, at cost, less accumulated depreciation and amortization 12,553 12,452 Total assets $ 81,250 $ 79,133 RRSat Global Communications Network Ltd. and its subsidiary company, Consolidated Balance Sheets (cont'd) In thousands, except share data March 31, December 31, 2007 2006 (Unaudited) (Audited) Liabilities and shareholders' equity Current liabilities Account payable: Trade $ 4,257 $ 4,488 Other 1,857 1,845 Fair value of embedded currency conversion derivatives 343 410 Related parties 30 27 Deferred income 3,444 3,992 Total current liabilities 9,931 10,762 Long-term liabilities Deferred income 3,985 3,945 Liability in respect of employee severance payments 820 660 Deferred taxes 439 421 Total long-term liabilities 5,244 5,026 Total liabilities 15,175 15,788 Shareholders' equity Share capital Ordinary share NIS 0.01 par value each (20,000,000 authorized as of March 31, 2007 and December 31, 2006, 17,242,300 shares issued and fully paid as of March 31, 2007 and December 31, 2006) 40 40 Additional paid in capital 51,385 51,280 Retained earnings 14,650 12,025 Total shareholders' equity $ 66,075 $ 63,345 Total liabilities and shareholders' equity $ 81,250 $ 79,133 RRSat Global Communications Network Ltd. and its subsidiary company, Consolidated Statements of Cash Flows In thousands Three months ended Year ended March 31, March 31, December 31,2006 2007 2006 (Unaudited) (Unaudited) (Audited) Cash flows from operating activities Net income $ 2,625 $ 1,561 $ 7,305 Adjustments required to reconcile net income to net cash provided by operating activities Depreciation and amortization 670 500 2,274 Provision for losses in account receivable 241 - 618 Deferred taxes (43) (24) 32 Changes in liability for employee severance payments, net 108 68 23 Capital gains on sale of fixed assets, net - - (1) Interest on securities held to maturity (154) Expenses in relation of options granted 105 3 117 Changes in fair value of embedded currency conversion derivatives (28) (124) (243) Changes in assets and liabilities: Decrease (increase) in marketable securities, net (3,124) 32 (232) Decrease (increase) in account receivable - trade 496 (652) (5,180) Increase in related parties, net (78) - (37) Decrease (increase) in account receivable - other (167) 16 25 Decrease (increase) in prepaid expenses (726) (47) 127 Increase (decrease) in deposits and long-term receivables 170 2 (227) Increase (decrease) in account payables (219) 2,342 1,912 Increase (decrease) in deferred income (508) (1,191) 3,306 Net cash (used in) provided by operating activities $ (632) $ 2,486 $ 9,819 RRSat Global Communications Network Ltd. and its subsidiary company, Consolidated Statements of Cash Flows (cont'd) In thousands Three months ended Year ended March 31. March 31. December 31. 2007 2006 2006 (Unaudited) (Unaudited) (Audited) Cash flows from investing activities Investment in fixed assets $ (771) $ (2,123) $ (5,903) Investment in securities held to maturity (25,178) - - Proceeds from sale of fixed assets - - 1 Net cash used in investing activities (25,949) (2,123) (5,902) Cash flows from financing activities Dividend paid $ - $ - $ (1,975) Proceeds from issuance of ordinary shares, net of offering costs of $ 5,046 - - 47,391 Net cash provided by financing activities $ - $ - $ 45,416 Increase (decrease) in cash and cash equivalents $ (26,581) $ 363 $ 49,333 Balance of cash and cash equivalents at beginning of period 51,393 2,060 2,060 Balance of cash and cash equivalents at end of period $ 24,812 $ 2,423 $ 51,393 A. Supplementary cash flow information Interest paid - - 1 Income taxes paid $ 1,008 $ 753 $ 2,941 Company Contact Information: Gil Efron, CFO, Tel: +972-8-861-0000, ; External Investor Relations Contacts: Ehud Helft / Kenny Green, Tel: +1-646-201-9246, DATASOURCE: RRSat Global Communications Network Ltd CONTACT: Company Contact Information: Gil Efron, CFO, Tel: +972-8-861-0000, ; External Investor Relations Contacts: Ehud Helft / Kenny Green, Tel: +1-646-201-9246,

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