RRST (MM)

Annual Revenues Reach Record $59.2 million, Up 37% Over 2006 OMER, Israel, Jan. 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 and twelve months ended December 31, 2007. Fourth Quarter Results: Revenues for the fourth quarter of 2007 totaled a record $16.3 million, an increase of 36% compared to $12.0 million in the fourth quarter of 2006. Backlog of signed agreements, as of December 31, 2007, reached a record $155.5 million, an increase of $18.2 million from the $137.3 million backlog of signed agreements as of September 30, 2007. Operating income for the fourth quarter of 2007 totaled $3.3 million, a 70% increase compared to $1.9 million in the fourth quarter of 2006. Adjusted net income for the fourth quarter of 2007 totaled $3.6 million, an increase of 37% compared to $2.6 million in the fourth quarter of 2006. Adjusted net income per diluted share totaled $0.21, compared to $0.17 in the fourth quarter of 2006. Net income on a GAAP basis for the fourth quarter of 2007 was $3.2 million, an increase of 84% compared to $1.7 million, in the fourth quarter of 2006. Net income per diluted share on a GAAP basis was $0.18, compared with $0.11 in the fourth quarter of 2006. Adjusted EBITDA for the fourth quarter of 2007 totaled $4.2 million, an increase of 15% compared to $3.6 million in the fourth quarter of 2006. Cash, cash equivalents and marketable securities as at December 31, 2007 were $63.4 million, compared with $59.9 million as at September 30, 2007. During the quarter, the Company generated $4.7 million in operating cash flow, excluding the $0.8 million generated from marketable securities, and presented as an inflow under the GAAP operating cash flow. Full Year: Revenues for the full year 2007 totaled a record $59.2 million, an increase of 37% compared to $43.3 million in 2006. Operating income for 2007 totaled $12.0 million, a 28% increase compared to $9.4 million in 2006. Adjusted net income for 2007 totaled $12.3 million, an increase of 52% compared to $8.1 million in 2006. Net income on a GAAP basis for 2007 was $11.4 million, an increase of 56% compared to $7.3 million, in 2006. Adjusted EBITDA for 2007 totaled $15.4 million, an increase of 20% compared to $12.8 million in 2006. David Rivel, Founder and CEO of RRsat commented, "2007 has been a major year for RRsat. During the year, we continued to expand our global network, forging new partnerships with satellite organizations, while laying additional fiber infrastructure to new regions and cities throughout Europe and North America. This year was also a milestone year in terms of new customers. Throughout 2007, we commenced a total of 60 new contracts, 27 of which were follow-on contracts with existing customers seeking to expand their relationship with RRsat, bringing the total number of channels we broadcast to over 400 at the end of the year. Finally, we culminated the year with a record $155.5 million in backlog of signed contracts, offering us visibility well into 2008 and beyond, attesting to the true strength of our business model." "Looking ahead to 2008, we will continue to seek to enhance our customer base both by leveraging our premier global network, while identifying additional growth drivers which will serve to enhance our services to both our existing customers and to new customers. This, by expanding geographically, while introducing additional innovative solutions, mainly in the promising and evolving market of Internet TV. We expect 2008 annual revenues to be in the range of $75 - $76 million, with revenues in the first quarter of 2008 in the range of $17.3 - $17.7 million," concluded Mr. Rivel. Conference Call Information The Company will hold a conference call scheduled later today, January 31, 2008 at 10:00 am ET (07:00 am PT; 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: 0-800-917-5108 Israel Dial-in Number: 03-918-0609 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: 1 877 456 0009 (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, the resulting income tax (increase) decrease and one-time expenses in the fourth quarter of 2006 relating to the IPO and related taxes. 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, depreciation and amortization and one-time expenses in the fourth quarter of 2006 relating to the IPO and related taxes. 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. FINANCIAL TABLES FOLLOW RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Operations In thousands, except share data Three months Year ended ended Dec-31 Dec-31 Dec-31 Dec-31 2007 2006 2007 2006 $ $ $ $ Revenues 59,221 43,284 16,332 12,041 Cost of revenues 38,419 27,451 10,769 7,698 Gross profit 20,802 15,833 5,563 4,343 Operating expenses Sales and marketing 3,017 1,831 842 430 General and administrative 5,767 3,588 1,466 998 One time fees associated with IPO - 1,000 - 1,000 Total operating expenses 8,784 6,419 2,308 2,428 Operating income 12,018 9,414 3,255 1,915 Interest and marketable securities income 2,631 450 720 328 Currency fluctuation and other financing income, net 329 374 211 147 Changes in fair value of embedded currency conversion derivatives (646) 243 (420) 21 Other income, net 4 4 - - Income before taxes on income 14,336 10,485 3,766 2,411 Income taxes 2,932 3,180 553 664 Net income 11,404 7,305 3,213 1,747 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Operations (cont'd) Three months Year ended ended Dec-31 Dec-31 Dec-31 Dec-31 2007 2006 2007 2006 Income per ordinary share Basic income per ordinary share 0.66 0.53 0.19 0.11 Diluted income per ordinary share 0.65 0.53 0.18 0.11 Weighted average number of ordinary shares used to compute basic income per ordinary share 17,249,710 13,746,467 17,271,941 15,843,967 Weighted average number of ordinary shares used to compute diluted income per ordinary share 17,418,180 13,793,694 17,472,282 15,889,796 RRsat Global Communications Network Ltd and its subsidiaries Reconciliation of Adjusted Net Income and Adjusted EBITDA in thousands except per share data Year ended Dec-31 Dec-31 2007 2006 Reconciliation of Net Income to Adjusted Net Income: Net income - as reported $ 11,404 $ 7,305 Non-cash equity-based compensation charge 411 117 Changes in fair value of embedded currency conversion derivatives 646 (243) Change in deferred tax on embedded derivatives (181) 71 One time fees associated with the IPO - 1,000 Taxes on one time management fee - (155) Adjusted net income $ 12,280 $ 8,095 Adjusted net income per diluted ordinary share $ 0.71 $ 0.59 Reconciliation of Net Income to Adjusted EBITDA: Net income - as reported $ 11,404 $ 7,305 Interest and marketable securities income (2,631) (450) Currency fluctuation and other financial (income) expenses, net (329) (374) Changes in fair value of embedded currency conversion derivatives 646 (243) Other income, net (4) (4) Income tax expense 2,932 3,180 One time fees associated with the IPO - 1,000 Non-cash equity-based compensation charge 411 117 Depreciation and amortization 2,979 2,274 Adjusted EBITDA 15,408 12,805 Reconciliation of Adjusted Net Income and Adjusted EBITDA in thousands except per share data Three months ended Dec-31 Dec-31 2007 2006 Reconciliation of Net Income to Adjusted Net Income: Net income - as reported $ 3,213 $ 1,747 Non-cash equity-based compensation charge 102 73 Changes in fair value of embedded currency conversion derivatives 420 (21) Change in deferred tax on embedded derivatives (115) 2 One time fees associated with the IPO - 1,000 Taxes on one time management fee - (155) Adjusted net income $ 3,620 $ 2,646 Adjusted net income per diluted ordinary share $ 0.21 $ 0.17 Reconciliation of Net Income to Adjusted EBITDA: Net income - as reported $ 3,213 $ 1,747 Interest and marketable securities income (720) (328) Currency fluctuation and other financial (income) expenses, net (211) (147) Changes in fair value of embedded currency conversion derivatives 420 (21) Other income, net - - Income tax expense 553 664 One time fees associated with the IPO - 1,000 Non-cash equity-based compensation charge 102 73 Depreciation and amortization 810 651 Adjusted EBITDA 4,167 3,639 RRSat Global Communications Network Ltd. and its Subsidiaries Consolidated Balance Sheets In thousands, except share data December December 31 31 2006 2007 Current assets Cash and cash equivalents $51,393 $ 28,409 Marketable securities 1,454 28,291 Accounts receivable: Trade (net of provision for doubtful account of $ 1,882 and $ 987 as of December 31, 2007 and December 31,2006, respectively) 10,187 10,421 Other 797 518 Fair value of embedded currency conversion derivatives 743 1,303 Related parties 64 14 Deferred taxes 184 711 Prepaid expenses 215 919 Total current assets 65,037 70,586 Deposits and long-term receivables 1,018 1,104 Marketable securities - 6,722 Assets held for employee severance payments 626 987 Fixed assets, at cost, less accumulated depreciation and amortization 12,452 15,991 Total assets $ 79,133 $ 95,390 RRSat Global Communications Network Ltd. and its Subsidiaries Consolidated Balance Sheets (cont'd) December December 31 31 2006 2007 Liabilities and shareholders' equity Current liabilities Account payable: Trade $4,488 $ 5,040 Other 1,845 1,559 Fair value of embedded currency conversion derivatives 410 1,616 Related parties 27 26 Deferred income 3,992 5,191 Total current liabilities 10,762 13,432 Long-term liabilities Deferred income 3,945 5,169 Liability in respect of employee severance payments 660 1,011 Deferred taxes 421 619 Total long-term liabilities 5,026 6,799 Total liabilities 15,788 20,231 Shareholders' equity Share capital Ordinary share NIS 0.01 par value each (20,000,000 authorized as of December 31, 2007 and December 31, 2006, 17,286,762 and 17,242,300 shares issued and fully paid as of December 31, 2007 and December 31, 2006, respectively) 40 40 Additional paid in capital 51,280 51,691 Retained earnings 12,025 23,429 Accumulated other comprehensive loss (1) Total shareholders' equity 63,345 75,159 Total liabilities and shareholders' equity $ 79,133 $ 95,390 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Cash Flows In thousands Year end December 31 2006 2007 Cash flows from operating activities Net income $ 7,305 $ 11,404 Adjustments required to reconcile net income to net cash provided by operating activities Depreciation and amortization 2,274 2,979 Provision for losses in account receivable 618 895 Deferred taxes 32 (329) Interest and amortization of held-to-maturity securities - (1,361) Interest and amortization of available for sale securities - (18) Changes in liability for employee severance payments, net 23 (10) Capital gains on sale of fixed assets, net (1) (4) Expenses in relation of options granted 117 411 Changes in fair value of embedded currency conversion derivatives (243) 646 Changes in assets and liabilities: Decrease (increase) in marketable securities, net (232) (2,013) Decrease (increase) in account receivable- trade (5,180) (1,129) Decrease (increase) in related parties, net (37) 49 Decrease in account receivable - other 25 279 Decrease (increase) in prepaid expenses 127 (704) Decrease (Increase) in deposits and long-term receivables (227) (86) Increase in account payables 1,912 128 Increase in deferred income 3,306 2,423 Net cash [used in] provided by operating activities $ 9,819 $ 13,560 Three months ended December 31 2006 2007 Cash flows from operating activities Net income $ 1,747 $ 3,213 Adjustments required to reconcile net income to net cash provided by operating activities Depreciation and amortization 651 810 Provision for losses in account receivable 445 286 Deferred taxes 33 (169) Interest and amortization of held-to-maturity securities - (416) Interest and amortization of available for sale securities - (18) Changes in liability for employee severance payments, net (83) (121) Capital gains on sale of fixed assets, net 3 - Expenses in relation of options granted 73 102 Changes in fair value of embedded currency conversion derivatives (21) 420 Changes in assets and liabilities: Decrease (increase) in marketable securities, net (78) 844 Decrease (increase) in account receivable- trade (921) (1,397) Decrease (increase) in related parties, net (37) 60 Decrease (increase) in account receivable - other 256 568 Decrease (increase) in prepaid expenses 232 167 Decrease (Increase) in deposits and long-term receivables 9 (292) Increase in account payables 527 677 Increase in deferred income 1,766 761 Net cash provided by operating activities $ 4,602 $ 5,495 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Cash Flows (cont'd) In thousands Year ended December 31 2006 2007 Cash flows from investing activities $ (5,903) $ (6,385) Investment in fixed assets Investment in securities available for sale - (2,000) Investment in securities held to maturity - (35,037) Proceeds from securities held to maturity - 5,807 Proceeds from securities available for sale - 1,062 Proceeds from sale of fixed assets 1 9 Net cash used in investing activities (5,902) (36,544) Cash flows from financing activities Dividend paid (1,975) - Proceeds from issuance of ordinary shares net of offering cost of $5,046 47,391 - Decrease in short term credit - - Net cash provided by (used in) financing activities 45,416 - Increase (decrease) in cash and cash equivalents 49,333 (22,984) Balance of cash and cash equivalents at beginning of period 2,060 51,393 Balance of cash and cash equivalents at end of period $51,393 $28,409 A. Non-cash transactions Investment in fixed assets - $138 B. Supplementary cash flow information Income taxes paid $2,941 $3,650 Three months ended December 31 2006 2007 Cash flows from investing activities $ (1,497) $ (1,342) Investment in fixed assets Investment in securities available for sale - (2,000) Investment in securities held to maturity - 94 Proceeds from securities held to maturity - 4,216 Proceeds from securities available for sale - 1,062 Proceeds from sale of fixed assets (4) (3) Net cash used in investing activities (1,501) 2,027 Cash flows from financing activities Dividend paid - - Proceeds from issuance of ordinary shares net of offering cost of $5,046 47,652 - Decrease in short term credit - (177) Net cash provided by (used in) financing activities 47,652 (177) Increase (decrease) in cash and cash equivalents 50,753 7,345 Balance of cash and cash equivalents at beginning of period 640 21,064 Balance of cash and cash equivalents at end of period $51,393 $28,409 A. Non-cash transactions Investment in fixed assets - $138 B. Supplementary cash flow information Income taxes paid $401 $711 Company Contact Information: External Investor Relations Contacts: Gil Efron, CFO Ehud Helft / Kenny Green Tel: +972-8-861-0000 Tel: +1-646-201-9246 DATASOURCE: RRsat Global Communications Network Ltd. CONTACT: Gil Efron, CFO of RRsat, +972-8-861-0000, ; External Investor Relations: Ehud Helft or Kenny Green, +1-646-201-9246, Web site: http://www.rrsat.com/

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