RRST (MM)

Backlog Increases Further Reaching New Level of $137.3 Million OMER, Israel, November 1 /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 September 30, 2007. Revenues for the third quarter of 2007 totaled $15.0 million, an increase of 29.6% compared to $11.5 million in the third quarter of 2006. Backlog of signed agreements, as of September 30, 2007, reached a record $137.3 million, a further increase of $5.2 million from the $132.1 million backlog of signed agreements as of June 30, 2007. Operating income for the third quarter of 2007 totaled $2.9 million, a 6.3% increase compared to $2.7 million in the third quarter of 2006. Adjusted net income for the third quarter of 2007 totaled $3.2 million, an increase of 63.1% compared to $2.0 million in the third quarter of 2006. Adjusted net income per diluted share totaled $0.19, compared to $0.15 in the third quarter of 2006. Net income on a GAAP basis for the third quarter of 2007 was $3.0 million, an increase of 49.5% compared to $2.0 million, in the third quarter of 2006. Net income per diluted share on a GAAP basis was $0.17, compared with $0.15 in the third quarter of 2006. Adjusted EBITDA for the third quarter of 2007 totaled $3.8 million, an increase of 13.3% compared to $3.3 million in the third quarter of 2006. Cash, cash equivalents and marketable securities as at September 30, 2007 were $59.9 million, compared with $57.4 million as at June 30, 2007. During the quarter, the Company generated $4.3 million in operating cash flow, excluding the $1.8 million generated from marketable securities, and presented as an inflow under the GAAP operating cash flow. David Rivel, CEO of RRsat commented, "Once again we generated record top and bottom line performance this quarter, fueled by the steady increase in orders for our premier end-to-end distribution and content management services. This strong growth compared to the third quarter last year was especially significant as the results last year included a large component of high-margin, non-recurring revenues incurred due to media interest in the regional hostilities in 2006. We reached new levels with our backlog, ending the quarter with a backlog of $137.3 million, a healthy net increase of $5.2 million during the quarter." Mr. Rivel added, "We continue to develop our strong product offering, signing new partnerships with premier global satellite operators. Furthermore, we continue to invest resources in laying additional infrastructure increasing our fiber optic capacity to key European cities, while steadily signing new and existing customers for our broad product offering. Looking ahead to the remainder of 2007 and 2008, we are holding initial discussions with several potential acquisition targets in the US. We hope to announce such a transaction 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 $58.3 - $58.7 million, implying fourth quarter revenues in the range of $15.4 - $15.8 million." Conference Call Information Conference call scheduled later today, November 1, 2007 at 10:00 am EDT (07:00 am PDT; 02:00 pm UK Time; 04:00 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: 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 will be available for two days following the call. To access the replay dial one of the following: 1-888-254-7270 (US) 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 400 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. Company Contact Information: Gil Efron, CFO Tel: +972-8-861-0000 External Investor Relations Contacts: Ehud Helft / Kenny Green Tel: +1-646-201-9246 FINANCIAL TABLES FOLLOW RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Operations In thousands, except share data Nine months ended Three months ended Sep-30 Sep-30 Sep-30 Sep-30 2007 2006 2007 2006 Revenues $ 42,889 $ 31,243 $ 14,954 $ 11,539 Cost of revenues 27,650 19,753 9,732 7,326 Gross profit 15,239 11,490 5,222 4,213 Operating expenses Sales and marketing 2,175 1,401 805 524 General and administrative 4,301 2,590 1,526 969 Total operating expenses 6,476 3,991 2,331 1,493 Operating income 8,763 7,499 2,891 2,720 Interest and marketable securities income 1,911 122 508 39 Currency fluctuation and other financing income, net 118 227 259 (2) Changes in fair value of embedded currency conversion derivatives (226) 222 (242) 26 Other income, net 4 4 - - Income before taxes on income 10,570 8,074 3,416 2,783 Income taxes 2,379 2,516 464 808 Net income $ 8,191 $ 5,558 $ 2,952 $ 1,975 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Operations (cont'd) In thousands, except share data Nine months ended Three months ended Sep-30 Sep-30 Sep-30 Sep-30 2007 2006 2007 2006 Income per ordinary share Basic income per ordinary share 0.48 0.42 0.17 0.15 Diluted income per ordinary share 0.47 0.42 0.17 0.15 Weighted average number of ordinary shares 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 shares used to compute diluted income per ordinary share 17,392,233 13,047,300 17,441,490 13,047,300 RRSat Global Communications Network Ltd and its subsidiaries Reconciliation of Adjusted Net Income and Adjusted EBITDA In thousands Nine months ended Three months ended Sep-30 Sep-30 Sep-30 Sep-30 2007 2006 2007 2006 Reconciliation of Net Income to Adjusted Net Income: Net income - as reported $ 8,191 $ 5,558 $ 2,952 $ 1,975 Non-cash equity-based compensation charge 309 45 103 21 Changes in fair value of embedded currency conversion derivatives 226 (222) 242 (26) Change in deferred tax on embedded derivatives (66) 69 (70) 8 Adjusted net income $ 8,660 $ 5,450 $ 3,227 $ 1,978 Adjusted net income per diluted ordinary share $ 0.50 $ 0.42 $ 0.19 $ 0.15 Reconciliation of Net Income to Adjusted EBITDA: Net income - as reported $ 8,191 $ 5,558 $ 2,952 $ 1,975 Interest and marketable securities income (1,911) (122) (508) (39) Currency fluctuation and other financial (income) expenses, net (118) (227) (259) 2 Changes in fair value of embedded currency conversion derivatives 226 (222) 242 (26) Other income, net (4) (4) - - Income tax expense 2,379 2,516 464 808 Non-cash equity-based compensation charge 309 45 103 21 Depreciation and amortization 2,169 1,624 782 591 Adjusted EBITDA 11,241 9,168 3,776 3,332 RRSat Global Communications Network Ltd. and its Subsidiaries Consolidated Balance Sheets In thousands, except share data Sep-30 Dec-31 2007 2006 Current assets Cash and cash equivalents $ 21,064 $ 51,393 Marketable securities 26,998 1,454 Accounts receivable: Trade (net of provision for doubtful account of $ 1,596 and $ 987 as of September 30, 2007 and December 31, 2006, respectively) 9,310 10,187 Other 1,086 797 Fair value of embedded currency conversion derivatives 1,117 743 Related parties 75 64 Deferred taxes 453 184 Prepaid expenses 1,086 215 Total current assets 61,189 65,037 Deposits and long-term receivables 812 1,018 Marketable securities 11,798 - Assets held for employee severance payments 789 626 Fixed assets, at cost, less accumulated depreciation and amortization 15,531 12,452 Total assets $ 90,119 $ 79,133 RRSat Global Communications Network Ltd. and its Subsidiaries Consolidated Balance Sheets (cont'd) Sep-30 Dec-31 2007 2006 Liabilities and shareholders' equity Current liabilities Short term credit $ 177 $ - Account payable: Trade 4,337 4,488 Other 1,660 1,845 Fair value of embedded currency conversion derivatives 1,010 410 Related parties 27 27 Deferred income 5,300 3,992 Total current liabilities 12,511 10,762 Long-term liabilities Deferred income 4,299 3,945 Liability in respect of employee severance payments 934 660 Deferred taxes 530 421 Total long-term liabilities 5,763 5,026 Total liabilities 18,274 15,788 Shareholders' equity Share capital Ordinary share NIS 0.01 par value each (20,000,000 authorized as of September 30, 2007 and December 31, 2006, 17,242,300 shares issued and fully paid as of September 30, 2007 and December 31, 2006) 40 40 Additional paid in capital 51,589 51,280 Retained earnings 20,216 12,025 Total shareholders' equity 71,845 63,345 Total liabilities and shareholders' equity $ 90,119 $ 79,133 RRSat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Cash Flows In thousands Nine months ended Three months ended Sep-30 Sep-30 Sep-30 Sep-30 2007 2006 2007 2006 Cash flows from operating activities Net income $ 8,191 $ 5,558 $ 2,952 $ 1,975 Adjustments required to reconcile net income to net cash provided by operating activities Depreciation and amortization 2,169 1,624 782 591 Provision for losses in account receivable 609 173 264 (21) Deferred taxes (160) (1) (247) (24) Changes in liability for employee severance payments, net 111 106 32 19 Capital gains on sale of fixed assets, net (4) (4) - - Interest and amortization of held-to-maturity securities (945) - (389) - Expenses in relation of options granted 309 45 103 21 Changes in fair value of embedded currency conversion derivatives 226 (222) 242 (26) Changes in assets and liabilities: Decrease (increase) in marketable securities, net (2,857) (154) 1,764 (91) Decrease (increase) in account receivable - trade 268 (4,259) (133) (1,215) Decrease (increase) in related parties, net (11) - 267 - Decrease (increase) in account receivable - other (289) (232) (454) (322) Decrease (increase) in prepaid expenses (871) (105) 39 (254) Decrease (Increase) in deposits and long-term receivables 206 (236) (126) 33 Increase (decrease) in account payables (549) 1,384 101 1,204 Increase in deferred income 1,662 1,540 910 137 Net cash provided by operating activities $ 8,065 $ 5,217 $ 6,107 $ 2,027 RRSat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Cash Flows (cont'd) In thousands Nine months ended Three months ended Sep-30 Sep-30 Sep-30 Sep-30 2007 2006 2007 2006 Cash flows from investing activities Investment in fixed assets $ (5,043) $ (4,406) $ (2,417) $ (1,188) Investments in securities held to maturity (35,131) - (1,307) - Proceeds from securities held to maturity 1,591 - 1,591 - Proceeds from sale of fixed assets 12 5 4 - Net cash used in investing activities $ (38,571) $ (4,401) $ (2,129) $ (1,188) Cash flows from financing activities Dividend paid $ - $ (1,975) $ - $ (740) Increase in Short term credit 177 - 107 - Stock issuance costs - (261) - (173) Net cash provided by (used in) financing activities $ 177 $ (2,236) $ 107 $ (913) Increase (decrease) in cash and cash equivalents $ (30,329) $ (1,420) $ 4,085 $ (74) Balance of cash and cash equivalents at beginning of period 51,393 2,060 16,979 714 Balance of cash and cash equivalents at end of period $ 21,064 $ 640 $ 21,064 $ 640 A. Non-cash transactions Investment in fixed assets $ 213 $ - $ 213 $ - B. Supplementary cash flow information Income taxes paid $ 2,939 $ 2,540 $ 1,047 $ 1,212 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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