Revenues Increase 34% to $17.8 Million; Completes Acquisition of
U.S. Teleport OMER, Israel, May 5 /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 March 31, 2008. First Quarter Highlights (compared to
first quarter 2007) - Revenues increased 34%, reaching $17.8
million - Adjusted net income up 26%, reaching $3.4 million (GAAP
net income, $2.6 million) - Cash, cash equivalents and marketable
securities further increased to $65.5 million - Backlog reached
record level of $158.8 million as of March 31, 2008 - Completed
acquisition of a U.S. teleport - Signed agreement to acquire
Israel's largest teleport - Board of Directors declared cash
dividend of $5.5 million, or $0.32 per ordinary share First Quarter
2008 Results: Revenues for the first quarter of 2008 totaled a
record $17.8 million, an increase of 34% compared to $13.3 million
in the first quarter of 2007. Backlog of signed agreements, as of
March 31, 2008, reached a record $158.8 million, a further increase
of $3.3 million from the $155.5 million backlog of signed
agreements as of December 31, 2007. Operating income for the first
quarter of 2008 totaled $3.0 million, a 10% increase compared to
$2.7 million in the first quarter of 2007. Adjusted net income for
the first quarter of 2008 totaled $3.4 million, an increase of 26%
compared to $2.7 million in the first quarter of 2007. Adjusted net
income per diluted share totaled $0.20, compared to $0.16 in the
first quarter of 2007. Net income on a GAAP basis for the first
quarter of 2008 was $2.6 million, compared to $2.6 million, in the
first quarter of 2007. Net income per diluted share on a GAAP basis
was $0.15, compared to $0.15 in the first quarter of 2007. Adjusted
EBITDA for the first quarter of 2008 totaled $4.0 million, an
increase of 14% compared to $3.5 million in the first quarter of
2007. Cash, cash equivalents and marketable securities as at March
31, 2008 were $65.5 million, compared with $63.4 million as at
December 31, 2007. During the quarter, the Company generated $3.8
million in operating cash flow. Acquisition of Hawley Teleport in
Pike County, Pennsylvania On May 1, 2008, RRsat completed the
acquisition of the assets of the Hawley Teleport located in Pike
County, Pennsylvania, for a purchase price of $4.25 million. RRsat
acquired all the property, assets and licenses of the Teleport from
Skynet Satellite Corporation. The Hawley Teleport, formerly owned
by satellite operator Loral Skynet, includes approximately 200
acres, a communication building on the premises of a size of
approximately 40,000 sq. ft, communications equipment and antennas,
in which substantial resources have been invested during the
teleport's 33 years of operation. The acquisition is expected to
contribute to the Company's results from 2009 onwards as the
Company leverages the acquisition as well as its global network to
generate additional revenues. The impact on 2008 results is
expected to be minimal as the revenue contribution and associated
expenses are expected to be offset throughout the year. Dividend
Distribution On May 4, 2008, the Company's Board of Directors
declared a cash dividend in the amount of $0.32 per ordinary share,
and in the aggregate amount of approximately $5.5 million. The
dividend will be payable on June 2, 2008 to all of the Company's
shareholders of record at the end of the trading day on NASDAQ on
May 19, 2008. According to the Israeli tax law, the Company will
deduct 20% of the dividend amount payable to each shareholder,
subject to applicable exemptions. The amount of dividend declared
does not necessarily reflect dividends for future periods, which
may change in accordance with the Company's dividend policy. The
dividend policy is described in detail in the Company's Annual
Report on Form 20-F for the year ended December 31, 2007. David
Rivel, CEO of RRsat commented, "The first quarter of 2008 has been
a true milestone quarter in terms of putting in place the
foundations for long term growth and expansion. During the quarter
we announced two acquisitions, the first being the Hawley Teleport
in Pike County, Pennsylvania, which was completed on May 1st, and
the second being the satellite business and the largest teleport in
Israel, previously owned by Israel's national telecommunications
company, Bezeq, which is expected to close in the third quarter of
2008. Both acquisitions will serve as major building blocks in our
growth and expansion strategy. In addition, during the quarter we
introduced new and innovative services to our customers with the
launch of our new High-Definition playout services center, as well
as the offering of new services for television over internet." "On
the financial front, this quarter we continued to generate strong
revenue growth with backlog growing further to new record levels
offering us visibility in 2008 and beyond. Furthermore, we
continued to generate healthy cash flow, which will support our
expansion strategy. Looking ahead, 2008 looks to be a truly
exciting year for the company in terms of growth, expansion and
identifying new opportunities, while constantly leveraging our
premier global network to offer advanced and cutting edge solutions
to our broad, ever growing, global customer base. We reiterate our
2008 annual revenue guidance of $75 to $76 million, and introduce
second quarter revenue guidance of $18.3 - $18.7 million,"
concluded Mr. Rivel. Conference Call Information Conference call
scheduled later today, May 5, 2008 at 09:00 am ET (06:00 am PT;
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: 1-888-407-2553 UK
Dial-in Number: 0-800-917-9141 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 telephone
replay dial one of the following numbers: +1-877-456-0009 (US) and
+972-3-925-5928 (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 425
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, (iii) our ability to report future successes, (iv) our
ability to consummate our acquisitions in a timely manner, or at
all, (v) our ability to successfully integrate the acquired assets,
(vi) the growth of our business in the United States and elsewhere,
(vii) our ability to build a strong local presence in the North
American region, and (viii) our intention to distribute dividends
in the future and the size of any dividends declared. 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. For example, dividend
declaration is not guaranteed and is subject to our board of
directors' sole discretion, which may elect not to pay dividends in
the future because of limitations of Israel law or because our
expected results of operations, financial condition, contractual
restrictions, planned capital expenditures, financing needs or
other factors cause our board of directors to conclude that a
distribution of dividends will prevent us from satisfying our
existing and foreseeable obligations as they become due. 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, 2007 and our
Current Reports on Form 6-K. RRsat Global Communications Network
Ltd. and its Subsidiaries Consolidated Statements of Operations In
thousands, except share data Three months ended March 31 March 31
2008 2007 Revenues $ 17,839 $ 13,275 Cost of revenues 12,373 8,470
Gross profit 5,466 4,805 Operating expenses Sales and marketing 901
662 General and administrative 1,573 1,435 Total operating expenses
2,474 2,097 Operating income 2,992 2,708 Interest and marketable
securities income 377 569 Currency fluctuation and other financing
income, net 181 8 Changes in fair value of embedded currency
conversion derivatives (988) 28 Income before taxes on income 2,562
3,313 Income taxes 21 (688) Net Income $ 2,583 $ 2,625 RRsat Global
Communications Network Ltd. and its Subsidiaries Consolidated
Statements of Operations (cont'd) In thousands, except share data
Three months ended March 31 March 31 2008 2007 Income per ordinary
share Basic income per ordinary share 0.15 0.15 Diluted income per
ordinary share 0.15 0.15 Weighted average number of ordinary shares
used to compute basic income per ordinary share 17,286,762
17,242,300 Weighted average number of ordinary shares used to
compute diluted income per ordinary share 17,444,149 17,313,715
RRsat Global Communications Network Ltd and its subsidiaries
Reconciliation of Adjusted Net Income and Adjusted EBITDA in
thousands Three months ended March March 31 31 2008 2007
Reconciliation of Net Income to Adjusted Net Income: Net income -
as reported $ 2,583 $ 2,625 Non-cash equity-based compensation
charge 104 105 Changes in fair value of embedded currency
conversion derivatives 988 (28) Change in deferred tax on embedded
derivatives (267) 8 Adjusted net income $ 3,408 $ 2,710 Adjusted
net income per diluted ordinary share $ 0.20 $ 0.16 Reconciliation
of Net Income to Adjusted EBITDA: Net income - as reported $ 2,583
$ 2,625 Interest and marketable securities income (377) (569)
Currency fluctuation and other financial (income) expenses, net
(181) (8) Changes in fair value of embedded currency conversion
derivatives 988 (28) Income tax expense (21) 688 Non-cash
equity-based compensation charge 104 105 Depreciation and
amortization 868 670 Adjusted EBITDA $ 3,964 $ 3,483 RRsat Global
Communications Network Ltd. and its Subsidiaries Consolidated
Balance Sheets In thousands, except share data As of As of March
December 31 31 2008 2007 Current assets Cash and cash equivalents $
32,436 $ 28,409 Marketable securities 29,382 28,291 Accounts
receivable: Trade (net of provision for doubtful account of $ 2,037
and $ 1,882 as of March 31, 2008 and December 31, 2007,
respectively) 8,609 10,421 Other 1,000 518 Fair value of embedded
currency conversion derivatives 1,775 1,303 Related parties 10 14
Deferred taxes 1,058 711 Prepaid expenses 2,148 919 Total current
assets 76,418 70,586 Deposits and long-term receivables 1,526 1,104
Marketable securities 3,695 6,722 Prepaid expenses 1,033 1,025
Assets held for employee severance payments 1,100 987 Fixed assets,
at cost, less accumulated depreciation and amortization 16,026
14,966 $ 99,798 $ 95,390 Total assets RRsat Global Communications
Network Ltd. and its Subsidiaries Consolidated Balance Sheets
(cont'd) As of As of March December 31 31 2008 2007 Liabilities and
shareholders' equity Current liabilities Account payable: Trade $
5,569 $ 5,040 Other 1,213 1,559 Fair value of embedded currency
conversion derivatives 3,076 1,616 Related parties - 26 Deferred
income 4,019 5,191 Total current liabilities 13,877 13,432
Long-term liabilities Deferred income 6,148 5,169 Liability in
respect of employee severance payments 1,252 1,011 Deferred taxes
675 619 Total long-term liabilities 8,075 6,799 Total liabilities
21,952 20,231 Shareholders' equity Share capital Ordinary share NIS
0.01 par value each (20,000,000 authorized as of March 31, 2008 and
December 31, 2007, 17,286,762 shares issued and fully paid as of
March 31, 2008 and 17,242,300 as of December 31, 2007) 40 40
Additional paid in capital 51,795 51,691 Retained earnings 26,012
23,429 Accumulated other comprehensive loss (1) (1) Total
shareholders' equity 77,846 75,159 Total liabilities and
shareholders' equity $ 99,798 $ 95,390 RRsat Global Communications
Network Ltd. and its Subsidiaries Consolidated Statements of Cash
Flows In thousands Three months ended March March 31 31 2008 2007
Cash flows from operating activities $ 2,583 $ 2,625 Net income
Adjustments required to reconcile net income to net cash provided
by operating activities Depreciation and amortization 868 670
Provision for losses in account receivable 155 241 Deferred taxes
(291) (43) Discount accretion and premium amortization of held- to-
maturity securities, net (237) (154) Discount accretion and premium
amortization of available- for- sale securities, net (42) - Changes
in liability for employee severance payments, net 128 108 Expenses
in relation of options granted 104 105 Changes in fair value of
embedded currency conversion derivatives 988 (28) Changes in assets
and liabilities: Decrease (increase) in account receivable - trade
1,657 496 Decrease (increase) in related parties, net (22) (78)
Decrease (increase) in account receivable - other (482) (167)
Increase in prepaid expenses (1,229) (726) Decrease (increase) in
deposits and long-term receivables (422) 170 Increase (decrease) in
account payables 211 (219) Increase (decrease) in deferred income
(193) (508) Net cash provided by operating activities $ 3,776 $
2,492 RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Statements of Cash Flows (cont'd) In thousands Three
months ended March 31 March 31 2008 2007 Cash flows from investing
activities $ (1,954) $ (771) Investment in fixed assets Investment
in other assets (10) - Investments in securities available- for-
sale (8,893) - Investments in securities held to maturity -
(25,178) Decrease (increase) in trading securities, net 283 (3,124)
Proceeds from securities available- for- sale 2,000 - Proceeds from
securities held to maturity 8,825 - Net cash provided by (used in)
investing activities $ 251 $ (29,073) Cash flows from financing
activities Net cash provided by financing activities $ - $ -
Increase (decrease) in cash and cash equivalents $ 4,027 $ (26,581)
Balance of cash and cash equivalents at beginning of period 28,409
51,393 Balance of cash and cash equivalents at end of period $
32,436 $ 24,812 A. Non-cash transactions Investment in fixed assets
$ 110 $ - B. Supplementary cash flow information Income taxes paid
$ 907 $ 1,008 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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