RRST (MM)

Revenues Increase 30% to a Record $19.1 Million; Backlog Reaches Record $174 Million 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, 2008. Second Quarter Highlights - Revenues increased 30% year-over-year, reaching $19.1 million - Gross margin increases to 32.4%; operating margin reaches 18.6% - Adjusted net income increased 31% year-over-year, reaching $3.6 million (GAAP net income, $3.3 million) - Backlog as of June 30, 2008, reached record level of $174 million Second Quarter 2008 Results: Revenues for the second quarter of 2008 totaled a record $19.1 million, an increase of 30% compared to $14.7 million in the second quarter of 2007 and an increase of 7% compared to $17.8 million in the prior quarter. Backlog of signed agreements, as of June 30, 2008, reached a record $174.0 million, a further increase of $15.2 million from the $158.8 million backlog of signed agreements as of March 31, 2008. Operating income for the second quarter of 2008 totaled $3.6 million, a 12% increase compared to $3.2 million in the second quarter of 2007, and a 19% increase compared to $3.0 million in the prior quarter. Adjusted net income for the second quarter of 2008 totaled $3.6 million, an increase of 31% compared to $2.7 million in the second quarter of 2007, and an increase of 5% compared to $3.4 million in the prior quarter. Adjusted net income per diluted share totaled $0.20, compared to $0.16 in the second quarter of 2007 and $0.20 in the prior quarter. Net income on a GAAP basis for the second quarter of 2008 was $3.3 million, compared to $2.6 million, in the second quarter of 2007 and $2.6 million in the prior quarter. Net income per diluted share on a GAAP basis was $0.19, compared to $0.15 in the second quarter of 2007 and $0.15 in the prior quarter. Adjusted EBITDA for the second quarter of 2008 totaled $4.6 million, an increase of 15% compared to $4.0 million in the second quarter of 2007, and an increase of 15% compared to $4.0 million in the prior quarter. Cash, cash equivalents and marketable securities as at June 30, 2008 were $56.0 million, compared with $65.5 million as at March 31, 2008. During the quarter, the Company generated $5.4 million in operating cash flow. Cash was used for a dividend payment in June of $5.5 million and $8.3 million for acquisitions. David Rivel, CEO of RRsat commented, "The second quarter of 2008 was another strong quarter, particularly in terms of revenues while improving our profitability, back to the ranges we expect. Furthermore, we continued to generate healthy cash flow, which will support our expansion strategy. Our backlog grew strongly, again to record levels offering us continued strong visibility for the coming years. In addition, we closed the acquisition of the Hawley teleport that will contribute to our growth in 2009 and beyond." "Looking ahead, we expect 2008 to be stronger than our earlier expectations and we therefore increase our annual revenue guidance to between $77 and $78 million. We also introduce third quarter revenue guidance between $19.7 and $20.3 million," concluded Mr. Rivel. Conference Call Information Conference call scheduled later today, July 31, 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: 1-800-994-4498 UK Dial-in Number: 0-800-404-8418 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: 1-888-269-0005 (US) and +972-3-925-5943 (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 Six months ended Three months ended Jun-30 Jun-30 Jun-30 Jun-30 2008 2007 2008 2007 Revenues $ 36,964 $ 27,935 $ 19,125 $ 14,660 Cost of revenues 25,292 17,918 12,919 9,448 Gross profit 11,672 10,017 6,206 5,212 Operating expenses Sales and marketing 1,848 1,370 947 708 General and administrative 3,276 2,775 1,703 1,340 Total operating expenses 5,124 4,145 2,650 2,048 Operating income 6,548 5,872 3,556 3,164 Interest and marketable securities income 803 1,403 426 834 Currency fluctuation and other financing income (expenses), net 396 (141) 215 (149) Changes in fair value of embedded currency conversion derivatives (1,193) 16 (205) (12) Other income, net 12 4 12 4 Income before taxes on income 6,566 7,154 4,004 3,841 Income taxes (674) (1,915) (695) (1,227) Net income $ 5,892 $ 5,239 $ 3,309 $ 2,614 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 2008 2007 2008 2007 Income per ordinary share Basic income per ordinary share $0.34 $0.30 $0.19 $0.15 Diluted income per ordinary share $0.34 $0.30 $0.19 $0.15 Weighted average number of ordinary share used to compute basic income per ordinary share 17,286,762 17,242,300 17,286,762 17,242,300 Weighted average number of Ordinary share used to compute diluted income per ordinary share 17,423,834 17,368,054 17,397,133 17,395,242 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 2008 2007 2008 2007 Reconciliation of Net Income to Adjusted Net Income: Net income - as reported $ 5,892 $ 5,239 $ 3,309 $ 2,614 Non-cash equity-based compensation charge 207 206 103 101 Changes in fair value of embedded currency conversion derivatives 1,193 (16) 205 12 Change in deferred tax on embedded derivatives (322) 5 (55) (3) Adjusted net income $ 6,970 $ 5,434 $ 3,562 $ 2,724 Adjusted net income per diluted ordinary share $ 0.40 $ 0.31 $ 0.20 $ 0.16 Reconciliation of Net Income to Adjusted EBITDA: Net income - as reported $ 5,892 $ 5,239 $ 3,309 $ 2,614 Interest and marketable securities income (803) (1,403) (426) (834) Currency fluctuation and other financial (income) expenses, net (396) 141 (215) 149 Changes in fair value of embedded currency conversion derivatives 1,193 (16) 205 12 Other income, net (12) (4) (12) (4) Income tax expense 674 1,915 695 1,227 Non-cash equity-based compensation charge 207 206 103 101 Depreciation and amortization 1,779 1,387 911 717 Adjusted EBITDA $8,534 $7,465 $4,570 $3,982 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Balance Sheets In thousands Jun-30 Dec-31 2008 2007 Current assets Cash and cash equivalents $32,143 $28,409 Marketable securities 22,251 28,291 Accounts receivable: Trade (net of provision for doubtful account of $ 2,251 and $ 1,882 as of June 30, 2008 and December 31, 2007, respectively) 8,722 10,421 Other 844 518 Fair value of embedded currency conversion derivatives 1,493 1,303 Related parties 16 14 Deferred taxes 1,222 711 Prepaid expenses 1,290 919 Total current assets 67,981 70,586 Deposits and long-term receivables 5,033 1,104 Marketable securities 1,643 6,722 Prepaid expenses 1,040 1,025 Assets held for employee severance payments 1,226 987 Fixed assets, at cost, less accumulated depreciation and amortization 21,150 14,966 Total assets $98,073 $95,390 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Balance Sheets (Cont'd) Jun-30 Dec-31 2008 2007 Liabilities and shareholders' equity Current liabilities Account payable: Trade $6,205 $5,040 Other 1,199 1,559 Fair value of embedded currency conversion derivatives 2,999 1,616 Related parties - 26 Deferred income 3,268 5,191 Total current liabilities 13,671 13,432 Long-term liabilities Deferred income 6,552 5,169 Liability in respect of employee severance payments 1,421 1,011 Deferred taxes 747 619 Total long-term liabilities 8,720 6,799 Total liabilities 22,391 20,231 Shareholders' equity Share capital: Ordinary shares NIS 0.01 par value each (20,000,000 authorized as of June 30, 2008 and December 31, 2007, 17,286,762 shares issued and fully paid as of June 30, 2008 and December 31, 2007) 40 40 Additional paid in capital 51,898 51,691 Retained earnings 23,789 23,429 Accumulated other comprehensive loss (45) (1) Total shareholders' equity 75,682 75,159 Total liabilities and shareholders' equity $98,073 $95,390 Consolidated Statements of Cash Flows In thousands Six months ended Three months ended Jun-30 Jun-30 Jun-30 Jun-30 2008 2007 2008 2007 Cash flows from operating activities Net income $5,892 $5,239 $3,309 $ 2,614 Adjustments required to reconcile net income to net cash provided by operating activities Depreciation and amortization 1,779 1,387 911 717 Provision for losses in account receivable 369 345 214 104 Deferred taxes (367) 87 (76) 130 Discount accretion and premium amortization of held- to- maturity securities, net (385) (556) (148) (402) Discount accretion and premium amortization of available- for- sale securities, net (120) - (78) - Changes in liability for employee severance payments, net 171 79 43 (29) Capital gains on sale of fixed assets, net (12) (4) (12) (4) Stock- based compensation expenses 207 206 103 101 Changes in fair value of embedded currency conversion derivatives 1,193 (16) 205 12 Changes in assets and liabilities: Decrease (increase) in account receivable - trade 1,330 401 (327) (95) Decrease (increase) in related parties, net (28) (278) (6) (200) Decrease (increase) in account receivable - other (326) 165 156 332 Decrease (increase) in prepaid expenses (371) (910) 858 (184) Decrease (increase) in deposits and long-term receivables (504) 332 (82) 162 Increase (decrease) in account payables 866 (139) 655 80 Increase (decrease) in deferred income (540) 752 (347) 1,260 Net cash provided by operating activities $ 9,154 $ 7,090 $ 5,378 $ 4,598 Consolidated Statements of Cash Flows (cont'd) In thousands Six months ended Three months ended Jun-30 Jun-30 Jun-30 Jun-30 2008 2007 2008 2007 Cash flows from investing activities Investment in fixed assets $(8,024) $(2,139) $(6,070) $(1,368) Investment in other assets (20) (998) (10) (998) Payment in respect of acquisition of activity (3,425) - (3,425) - Investments in securities available- for- sale (10,393) - (1,500) - Investments in securities held to maturity - (33,824) - (8,646) Decrease (increase) in trading securities, net 1,497 (4,621) 1,214 (1,497) Proceeds from securities available- for- sale 4,000 - 2,000 - Proceeds from securities held to maturity 16,460 - 7,635 - Proceeds from sale of fixed assets 17 8 17 8 Net cash provided by (used in) investing activities $112 $(41,574) $(139) $(12,501) Cash flows from financing activities Increase in short term credit $- $70 $- $70 Dividend paid (5,532) - (5,532) - Net cash provided by (used in) financing activities $(5,532) $70 $(5,532) $70 Increase (decrease) in cash and cash equivalents 3,734 (34,414) (293) (7,833) Balance of cash and cash equivalents at beginning of period 28,409 51,393 32,436 24,812 Balance of cash and cash equivalents at end of period $ 32,143 $ 16,979 $ 32,143 $ 16,979 A. Non-cash transactions Investment in fixed assets $ 77 $ 511 $ 77 $ 511 B. Supplementary cash flow information Income taxes paid $ 1,442 $ 1,892 $ 535 $ 884 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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