RRST (MM)

FY 2009 Revenues Expected To Exceed $100 Million OMER, Israel, October 30 /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-month period ended September 30, 2008. Third Quarter Highlights (compared to third quarter 2007) - Revenues increased 34%, reaching $20.1 million - Gross Margin totals 32.7%; Operating Margin reaches 19.8% - GAAP net income, $4.0 million; Adjusted net income totals $3.1 million - Operating cash flow $7 million; Cash and marketable securities' $61.9 million at September 30, 2008 - Backlog reached record level of $178.5 million as of September 30, 2008 - Expected to exceed $100 million in revenues in FY 2009 - Board of Directors declared cash dividend of $5 million, or $0.29 per ordinary share Revenues for the third quarter of 2008 totaled a record $20.1 million, an increase of 34% compared to $15.0 million in the third quarter of 2007. Backlog of signed agreements, as of September 30, 2008, reached a record $178.5 million, a further increase of $4.5 million from the $174.0 million backlog of signed agreements as of June 30, 2008. Operating income for the third quarter of 2008 totaled $4.0 million, a 38% increase compared to $3.0 million in the third quarter of 2007. Adjusted net income for the third quarter of 2008 totaled $3.1 million, compared to $3.2 million in the third quarter of 2007. The decline is primarily the result of an increase in tax expenses in the third quarter of 2008. Adjusted net income per diluted share totaled $0.18, compared to $0.19 in the third quarter of 2007. Net income on a GAAP basis for the third quarter of 2008 totaled $4.0 million, compared to $3.0 million, in the third quarter of 2007. Net income per diluted share on a GAAP basis was $0.23, compared to $0.17 in the third quarter of 2007. Adjusted EBITDA for the third quarter of 2008 totaled $5.1 million, an increase of 34% compared to $3.8 million in the third quarter of 2007. Cash, cash equivalents and marketable securities as of September 30, 2008 were $61.9 million, compared with $56.0 million as at June 30, 2008. During the quarter, the Company generated $7.0 million in operating cash flow. Dividend Distribution On October 29, 2008, the Company's Board of Directors declared a cash dividend in the amount of $0.29 per ordinary share, and in the aggregate amount of approximately $5 million. The dividend will be payable on November 24, 2008 to all of the Company's shareholders of record at the end of the trading day on the NASDAQ on November 17, 2008. According to the Israeli tax law, the Company will withhold at source 20% of the dividend amount payable to each shareholder, subject to applicable exemptions. The dividend per share declared for the third quarter of 2008 does not necessarily reflect dividends for future periods, which may change at any time in accordance with the Company's dividend policy. The Company's 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, "This quarter we showed a strong increase, both year over year and compared to previous quarters this year in our operating profitability, while continuing to generate healthy revenue growth, both year over year and sequentially. This quarter we once again noted the strength of our business model, evident in our strong cash flow, healthy ending cash balance, high revenue visibility, and high profitability. These key factors, primarily our strong backlog and healthy cash balance, are key factors in the current operating environment, offering us visibility well into 2009, as well as the financial resources to continue to identify and take advantages of opportunities as they may arise in the current operating environment. We are increasing once again our 2008 annual revenue guidance range to $78 to $78.5 million, with fourth quarter 2008 revenues expected to be in the range of $21 - $21.5 million. Furthermore, we are introducing our initial 2009 annual revenue expectations of over $100 million." "On the acquisition front, we expect to soon complete the acquisition of the Bezeq's satellite business, and its strategically located Israeli Emeq Ha'ela teleport, an especially lucrative teleport given the variety of channels it already distributes. We expect this teleport, together with the US-based teleport acquired in the second quarter of 2008, to serve as key growth drivers for the Company. We intend to leverage their location, infrastructure and customer base to further expand our services to new regions while enhancing our offering to these teleports' customers. This, by offering them access to the RRsat global network and full basket of services ranging from both standard and high definition playout services, to global satellite distribution and internet TV, accessible on all continents over a wide variety of mediums, reaching millions of households worldwide." concluded Mr. Rivel. Conference Call Information Conference call scheduled later today, October 30, 2008 at 09:00 am ET (06:00 am PT; 01:00 pm UK Time; 03:00 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: 1-866-345-5855 UK Dial-in Number: 0-800-404-8418 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. A 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. 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 2008 2007 2008 2007 Revenues $57,039 $42,889 $20,075 $14,954 Cost of revenues 38,793 27,650 13,501 9,732 Gross profit 18,246 15,239 6,574 5,222 Operating expenses Sales and marketing 2,818 2,175 970 805 General and administrative 4,902 4,301 1,626 1,526 Total operating expenses 7,720 6,476 2,596 2,331 Operating income 10,526 8,763 3,978 2,891 Interest and marketable securities income 1,096 1,911 293 508 Currency fluctuation and other financing income, net 330 118 (66) 259 Changes in fair value of embedded currency conversion derivatives 154 (226) 1,347 (242) Other income, net 12 4 - - Income before taxes on income 12,118 10,570 5,552 3,416 Income taxes (2,271) (2,379) (1,597) (464) Net income $ 9,847 $ 8,191 $ 3,955 $2,952 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Operations (cont'd) In USD, except share data Nine months ended Three months ended Sep-30 Sep-30 Sep-30 Sep-30 2008 2007 2008 2007 Income per ordinary share Basic income per ordinary share 0.57 0.48 0.23 0.17 Diluted income per ordinary share 0.57 0.47 0.23 0.17 Weighted average number of ordinary shares 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 shares used to compute diluted income per ordinary share 17,417,215 17,392,233 17,402,058 17,441,490 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 2008 2007 2008 2007 Reconciliation of Net Income to Adjusted Net Income: Net income - as reported $ 9,847 $ 8,191 $ 3,955 $ 2,952 Non-cash equity-based compensation charge 312 309 105 103 Changes in fair value of embedded currency conversion derivatives (154) 226 (1,347) 242 Change in deferred tax on embedded derivatives 42 (66) 364 (70) Adjusted net income $ 10,047 $ 8,660 $ 3,077 $ 3,227 Adjusted net income per diluted ordinary share $ 0.58 $ 0.50 $ 0.18 $ 0.19 Reconciliation of Net Income to Adjusted EBITDA: Net income - as reported $ 9,847 $ 8,191 $ 3,955 $ 2,952 Interest and marketable securities income (1,096) (1,911) (293) (508) Currency fluctuation and other financial (income) expenses, net (330) (118) 66 (259) Changes in fair value of embedded currency conversion derivatives (154) 226 (1,347) 242 Other income, net ( 12) (4) - - Income tax expense 2,271 2,379 1,597 464 Non-cash equity-based compensation charge 312 309 105 103 Depreciation and amortization 2,770 2,169 991 782 Adjusted EBITDA $ 13,608 $ 11,241 $ 5,074 $ 3,776 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Balance Sheets In thousands, except share data Sep-30 Dec-31 2008 2007 Current assets Cash and cash equivalents $32,698 $28,409 Marketable securities 27,600 28,291 Accounts receivable: Trade (net of provision for doubtful account of $ 2,423 and $ 1,882 as of September 30, 2008 and December 31, 2007, respectively) 8,474 10,421 Other 228 518 Fair value of embedded currency conversion derivatives 990 1,303 Related parties 22 14 Deferred taxes 987 711 Prepaid expenses 932 919 Total current assets 71,931 70,586 Deposits and long-term receivables 5,185 1,104 Marketable securities 1,625 6,722 Prepaid expenses 1,040 1,025 Assets held for employee severance payments 1,251 987 Fixed assets, at cost, less accumulated depreciation and amortization 21,337 14,966 Total assets $102,369 $95,390 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Balance Sheets (cont'd) Sep-30 Dec-31 2008 2007 Liabilities and shareholders' equity Current liabilities Account payable: Trade $ 7,099 $5,040 Other 1,595 1,559 Fair value of embedded currency conversion derivatives 1,149 1,616 Related parties - 26 Deferred income 3,598 5,191 Total current liabilities 13,441 13,432 Long-term liabilities Deferred income 7,056 5,169 Liability in respect of employee severance payments 1,459 1,011 Deferred taxes 759 619 Total long-term liabilities 9,274 6,799 Total liabilities 22,715 20,231 Shareholders' equity Share capital Ordinary share NIS 0.01 par value each (20,000,000 authorized as of September 30, 2008 and December 31, 2007, 17,286,762 shares issued and fully paid as of September 30, 2008 and December 31, 2007) 40 40 Additional paid in capital 52,003 51,691 Retained earnings 27,744 23,429 Accumulated other comprehensive loss (133) (1) Total shareholders' equity 79,654 75,159 Total liabilities and shareholders' equity $102,369 $95,390 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Cash Flows In thousands Nine months Three months ended ended Sep-30 Sep-30 Sep-30 Sep-30 2008 2007 2008 2007 Cash flows from operating activities $ Net income $9,847 $8,191 $3,955 $2,952 Adjustments required to reconcile net income to net cash provided by operating activities Depreciation and amortization 2,770 2,169 991 782 Provision for losses in account receivable 541 609 172 264 Deferred taxes (89) (160) 278 (247) Discount accretion and premium amortization of held- to- maturity securities, net (565) (945) (180) (389) Discount accretion and premium amortization of available- for- sale securities, net (178) - (58) - Changes in liability for employee severance payments, net 184 111 13 32 Capital gains on sale of fixed assets, net (12) (4) - - Stock- based compensation expenses 312 309 105 103 Changes in fair value of embedded currency conversion derivatives (154) 226 (1,347) 242 Changes in assets and liabilities: Decrease (increase) in account receivable - trade 1,406 268 76 (133) Decrease (increase) in related parties, net (34) (11) (6) 267 Decrease (increase) in account receivable - other 290 (289) 616 (454) Decrease (increase) in prepaid expenses (13) (871) 358 39 Decrease (Increase) in deposits and long-term receivables (556) 206 (52) (126) Increase (decrease) in account payables 2,069 (549) 1,203 (410) Increase in deferred income 294 1,662 834 910 Net cash provided by operating activities $16,112 $ 10,922 $ 6,958 $3,832 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 2008 2007 2008 2007 Cash flows from investing activities Investment in fixed assets $(9,113) $ (4,038) $(1,089) $ (1,899) Investment in other assets (22) (1,005) (2) (7) Payment in respect of acquisition of activity (3,525) - (100) - Investments in securities available- for- sale (19,188) - (8,795) - Investments in securities held to maturity - (35,131) - (1,307) Proceeds from securities held to maturity 19,507 1,591 3,047 1,591 Decrease (increase) in trading securities, net 2,033 (2,857) 536 1,764 Proceeds from securities available- for- sale 4,000 - - - Proceeds from sale of fixed assets 17 12 - 4 Net cash used in investing activities $(6,291) $ (41,428) $(6,403) $ 146 Cash flows from financing activities Increase in Short term credit $ - $ 177 $ - $ 107 Dividend paid (5,532) - - - Net cash provided by (used in) financing activities $(5,532) $ 177 $ - $ 107 Increase (decrease) in cash and cash equivalents $ 4,289 $ (30,329) $ 555 $ 4,085 Balance of cash and cash equivalents at beginning of period 28,409 51,393 32,143 16,979 Balance of cash and cash equivalents at end of period $ 32,698 $ 21,064 $ 32,698 $ 21,064 A. Non-cash transactions Investment in fixed assets $ 164 $ 213 $ 164 $ 213 B. Supplementary cash flow information Income taxes paid $ 1,827 $ 2,939 $ 385 $ 1,047 Company Contact Information: External Investor Relations Contacts: Gil Efron, CFO Ehud Helft / Kenny Green Tel: +972-8-861-0000 Tel: +1-646-201-9246 RRSat Global Communications Network Ltd 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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