RRST (MM)

- Highest Backlog Level in Company History; Updating Annual Guidance OMER, Israel, July 31 /PRNewswire-FirstCall/ -- 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 June 30, 2007. Revenues for the second quarter of 2007 totaled $14.7 million, an increase of 42.6% compared to $10.3 million in the second quarter of 2006. Operating income for the second quarter of 2007 totaled $3.2 million, a 23.0% increase compared to $2.6 million in the second quarter of 2006. Adjusted net income for the second quarter of 2007 totaled $2.7 million, an increase of 36.7% compared to $2.0 million in the second quarter of 2006. Adjusted net income per diluted share totaled $0.16, compared to $0.15 in the second quarter of 2006. Adjusted EBITDA for the second quarter of 2007 totaled $4.0 million, an increase of 27.4% compared to $3.1 million in the second quarter of 2006. Net income on a GAAP basis for the second quarter of 2007 was $2.6 million, an increase of 29.3% compared to $2.0 million, in the second quarter of 2006. Net income per diluted share on a GAAP basis was $0.15, compared with $0.15 in the second quarter of 2006. Cash, cash equivalents and marketable securities as at June 30, 2007 were $57.4 million, compared with $54.7 million as at March 31, 2007. During the quarter, the Company generated $4.6 million in operating cash flow, excluding the $1.5 million invested in marketable securities, and presented as an outflow under the GAAP operating cash flow. David Rivel, CEO of RRSat commented, "This quarter we continued to generate excellent financial performance, while setting new records in several key financial parameters. We ended the quarter with our highest backlog in history, reaching $132.1 million, our revenues are at record levels, and, consequently we presented an increase in profits and a strong cash flow. Altogether, 2007 is evolving into a very exciting year for RRSat on all fronts." Mr. Rivel added, "Looking ahead, we believe 2007 offers many opportunities for the company. We are generating substantial organic growth, and have identified several potential acquisition targets in the US, which we believe will complement our product offering, further driving performance. We hope to finalize such an acquisition by the end of 2007" concluded Mr. Rivel, "As a result of our strong performance and record backlog, we are increasing our annual 2007 revenue guidance to the range of $57.0 - $57.5 million, with third quarter revenues expected to be in the range of $14.7 - $14.9 million." Conference Call Information Conference call scheduled later today, July 31, 2007 at 10:00 am EDT (07:00 am PDT; 03:00 pm UK Time; 05:00 pm Israel Time). 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 Number: +44-(0)-800-917-5108 Israel Dial-in Number: +972-(0)-3-918-0609 International Dial-in Number: +972-3-918-0609 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 will be available for two days following the call. To access the replay dial one of the following: +1-888-254-7270 (US); +44(0)-800-028-6837 (UK) and +972-3-925-5940 (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. 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 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 provide these services to more than 385 television and radio channels, covering more than 150 countries. Visit the company's website http://www.rrsat.com/ for more information. Safe Harbor Statement 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 expand our client base and 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, please refer to our SEC filings and the amendments thereto, including our Annual Report on Form 20-F for the year ended December 31, 2006 and our Current Reports on Form 6-K. FINANCIAL TABLES FOLLOW RRSat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Operations In thousands, except share data Six months ended Three months ended Jun-30 Jun-30 Jun-30 Jun-30 2007 2006 2007 2006 $ $ $ $ Revenues 27,935 19,704 14,660 10,281 Cost of revenues 17,918 12,427 9,448 6,514 Gross profit 10,017 7,277 5,212 3,767 Operating expenses Sales and marketing 1,370 877 708 387 General and administrative 2,775 1,621 1,340 809 Total operating expenses 4,145 2,498 2,048 1,196 Operating income 5,872 4,779 3,164 2,571 Interest and marketable securities income 1,403 83 834 28 Currency fluctuation and other financing income, net (141) 229 (149) 227 Changes in fair value of embedded currency conversion derivatives 16 196 (12) 72 Other income, net 4 4 4 4 Income before taxes on income 7,154 5,291 3,841 2,902 Income taxes 1,915 1,708 1,227 880 Net income $5,239 $3,583 $2,614 $2,022 RRSat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Operations (cont'd) In thousands, except share data Six months ended Three months ended Jun-30 Jun-30 Jun-30 Jun-30 2007 2006 2007 2006 Income per ordinary share Basic income per ordinary share 0.30 0.27 0.15 0.15 Diluted income per ordinary share 0.30 0.27 0.15 0.15 Weighted average number of ordinary share used to compute basic income per ordinary share 17,242,300 13,047,300 17,242,300 13,047,300 Weighted average number of Ordinary share used to compute diluted income per ordinary share 17,368,054 13,129,200 17,395,242 13,129,200 RRSat Global Communications Network Ltd. and its Subsidiaries Reconciliation of Adjusted Net Income and Adjusted EBITDA In thousands, except share data Six months ended Three months ended Jun-30 Jun-30 Jun-30 Jun-30 2007 2006 2007 2006 Reconciliation of Net Income to Adjusted Net Income: Net income - as reported $ 5,239 $ 3,583 $ 2,614 $ 2,022 Non-cash equity-based compensation charge 206 24 101 21 Changes in fair value of embedded currency conversion derivatives (16) (196) 12 (72) Change in deferred tax on embedded derivatives 5 61 (3) 22 Adjusted net income $ 5,434 $ 3,472 $ 2,724 $ 1,993 Diluted Adjusted net income per ordinary shares 0.31 0.26 0.16 0.15 Reconciliation of Net Income to Adjusted EBITDA: Net income - as reported $ 5,239 $ 3,583 $ 2,614 $ 2,022 Interest and marketable securities (income) (1,403) (83) (834) (28) Currency fluctuation and other financial (income) expenses, net 141 (229) 149 (227) Changes in fair value of embedded currency conversion derivatives (16) (196) 12 (72) Other expenses (income), net (4) (4) (4) (4) Income tax expense 1,915 1,708 1,227 880 Non-cash equity-based compensation charge 206 24 101 21 Depreciation and amortization 1,387 1,033 717 533 Adjusted EBITDA $7,465 $5,836 $3,982 $3,125 RRSat Global Communications Network Ltd. and its Subsidiaries Consolidated Balance Sheets In thousands, except share data Jun-30 Dec-31 2007 2006 Current assets $ $ Cash and cash equivalents 16,979 51,393 Marketable securities 24,970 1,454 Accounts receivable: Trade (net of provision for doubtful account of $ 1,332 and $ 987 as of June 30, 2007 and December 31, 2006, respectively) 9,441 10,187 Other 633 797 Fair value of embedded currency conversion derivatives 744 743 Related parties 327 64 Deferred taxes 151 184 Prepaid expenses 1,125 215 Total current assets 54,370 65,037 Deposits and long-term receivables 686 1,018 Marketable securities 15,485 - Assets held for employee severance payments 729 626 Fixed assets, at cost, less accumulated depreciation and amortization 14,709 12,452 Total assets $85,979 $79,133 RRSat Global Communications Network Ltd. and its Subsidiaries Consolidated Balance Sheets (cont'd) In thousands, except share data Jun-30 Dec-31 2007 2006 Liabilities and shareholders' equity Current liabilities Short term credit $ 70 $ - Account payable: Trade 5,368 4,488 Other 1,337 1,845 Fair value of embedded currency conversion derivatives 395 410 Related parties 13 27 Deferred income 4,491 3,992 Total current liabilities 11,674 10,762 Long-term liabilities Deferred income 4,198 3,945 Liability in respect of employee severance payments 842 660 Deferred taxes 475 421 Total long-term liabilities 5,515 5,026 Total liabilities 17,189 15,788 Shareholders' equity Share capital Ordinary share NIS 0.01 par value each (20,000,000 authorized as of June 30, 2007 and December 31, 2006, 17,242,300 shares issued and fully paid as of June 30, 2007 and December 31, 2006) 40 40 Additional paid in capital 51,486 51,280 Retained earnings 17,264 12,025 Total shareholders' equity 68,790 63,345 Total liabilities and shareholders' equity $85,979 $79,133 RRSat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Cash Flows In thousands Six months ended Three months ended Jun-30 Jun-30 Jun-30 Jun-30 2007 2006 2007 2006 Cash flows from operating activities Net income $ 5,239 $ 3,583 $ 2,614 $ 2,022 Adjustments required to reconcile net income to net cash provided by operating activities Depreciation and amortization 1,387 1,033 717 533 Provision for losses in account receivable 345 194 104 135 Deferred taxes 87 23 130 47 Changes in liability for employee severance payments, net 79 87 (29) 19 Capital gains on sale of fixed assets, net (4) (4) (4) (4) Interest and amortization on held to maturity securities (556) - (402) - Expenses in relation of options granted 206 24 101 21 Changes in fair value of embedded currency conversion derivatives (16) (196) 12 (72) Changes in assets and liabilities: Increase in marketable securities, net (4,621) (63) (1,497) (95) Decrease (increase) in account receivable - trade 401 (3,044) (95) (2,333) Increase in related parties, net (278) - (200) - Decrease in account receivable - other 165 90 332 74 Decrease (increase) in prepaid expenses (910) 149 (184) 196 Decrease (Increase) in deposits and long-term receivables 332 (269) 162 (271) Increase (decrease) in account payables (139) 180 80 (2,162) Increase in deferred income 752 1,403 1,260 2,594 Net cash provided by operating activities $ 2,469 $ 3,190 $ 3,101 $ 704 RRSat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Cash Flows (cont'd) In thousands Six months ended Three months ended Jun-30 Jun-30 Jun-30 Jun-30 2007 2006 2007 2006 Cash flows from investing activities Investment in fixed assets $ (3,137) $ (3,218) $ (2,366) $ (1,095) Investment in securities held to maturity (33,824) - (8,646) - Proceeds from sale of fixed assets 8 5 8 5 Net cash used in investing activities $(36,953) $ (3,213) $(11,004) $ (1,090) Cash flows from financing activities Dividend paid $ - $ (1,235) $ - $ (1,235) Increase in Short term credit 70 - 70 - Stock issuance costs - (88) - (88) Net cash provided by (used in) financing activities $70 $ (1,323) $ 70 $ (1,323) Increase (decrease) in cash and cash equivalents $(34,414) $ (1,346) $ (7,833) $ (1,709) Balance of cash and cash equivalents at beginning of period 51,393 2,060 24,812 2,423 Balance of cash and cash equivalents at end of period $ 16,979 $ 714 $ 16,979 $ 714 A. Non-cash transaction Investment in fixed assets $ 511 $ - $511 $ - B. Supplementary cash flow information Income taxes paid $1,892 $1,328 $884 $575 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, +972-8-861-0000, ; or External Investor Relations: Ehud Helft or Kenny Green, +1-646-201-9246, , both of RRSat Global Communications Network Ltd. Web site: http://www.rrsat.com/

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