RRST (MM)

Annual Revenues Reach a Record $79 Million; Backlog Reaches New $185.7 Million Record OMER, Israel, January 29 /PRNewswire-FirstCall/ -- Fourth Quarter 2008 Highlights (compared to fourth quarter 2007) - Revenues increase 34% reaching $22.0 million - Operating income increases 38% to $5.0 million - Adjusted EBITDA increases 39% to $5.8 million - Reiterate 2009 revenue guidance of over $100 million and introduce first quarter 2009 guidance 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 fourth quarter and full year ended December 31, 2008. Fourth Quarter 2008 Results: Revenues for the fourth quarter of 2008 totaled $22.0 million, an increase of 34% compared to $16.3 million in the fourth quarter of 2007. Backlog of signed agreements, as of December 31, 2008, reached $185.7 million, an increase from the $178.5 million backlog of signed agreements as of September 30, 2008. Operating income for the fourth quarter of 2008 totaled $4.5 million, a 38% increase compared to $3.3 million in the fourth quarter of 2007. Net income on a GAAP basis for the fourth quarter of 2008 was $3.6 million, an increase of 13% compared to $3.2 million in the fourth quarter of 2007. Net income per diluted share on a GAAP basis was $0.21, compared to $0.18 in the fourth quarter of 2007. Adjusted EBITDA for the fourth quarter of 2008 totaled $5.7 million, an increase of 39% compared to $4.2 million in the fourth quarter of 2007. Adjusted net income for the fourth quarter of 2008 totaled $2.8 million, compared to $3.6 million in the fourth quarter of 2007. Net income for the quarter was impacted by higher tax expense incurred following the strengthening of the US dollar against the Israeli shekel during the period, resulting in an appreciation of the Company's US dollar cash balance relative to the shekel. This appreciation in the cash balance is viewed as a taxable gain by the Israeli tax authorities. Adjusted net income per diluted share, which was similarly impacted by the higher tax expense, totaled $0.17, compared to $0.21 in the fourth quarter of 2007. Cash, cash equivalents and marketable securities as at December 31, 2008 were $46.6 million, compared with $61.9 million as at September 30, 2008. During the quarter, the Company generated $3.7 million in operating cash flow, paid out the balance of $12.6 million for the acquisition of the Emek Ha'ela Teleport and distributed a dividend of $5 million to our shareholders. Full Year 2008 Results: Revenues for the full year 2008 totaled a record $79.0 million, an increase of 33% compared to $59.2 million in 2007. Operating income for 2008 totaled $15.0 million, a 25% increase compared to $12.0 million in 2007. Net income on a GAAP basis for 2008 was $13.4 million, an increase of 18% compared to $11.4 million in 2007. Adjusted EBITDA for 2008 totaled $19.3 million, an increase of 26% compared to $15.4 million in 2007. Adjusted net income for 2008 totaled $12.9 million, an increase of 5% compared to $12.3 million in 2007. David Rivel, CEO of RRsat commented, "2008 was a year of major achievements and expansion for RRsat. Throughout the year our revenues increased to close to $80 million, we presented sequential quarterly increases in our gross profit and operating income, all, while continuing to generate cash on a steady and ongoing basis. Throughout 2008 we continued to expand our business, commencing a total of 60 new contracts, including 21 of which were follow-on contracts with existing customers, bringing the total number of channels we broadcast to 500. We culminated the year with a new record backlog of $185.7 million granting us good visibility well into 2009, a key asset in the current macro-economic environment. 2008 was also a milestone year in terms of business expansion. We acquired two important teleports, expanding our global presence to North America, while further enhancing our local base by acquiring a major strategically-located teleport." "Looking ahead to 2009, we will continue to seek to enhance our customer base and navigate the current environment by further leveraging our premier global network, broad and diverse customer base, international reach and strong cash position. We are reiterating our 2009 annual revenues guidance to surpass $100 million, with revenues in the first quarter of 2009 expected to be in the range of $22.8 - $23.3 million." concluded Mr. Rivel. Conference Call Information Conference call scheduled later today, January 29, 2009 at 9:00 am ET. 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: +972-3918-0609 at: 9:00 am Eastern Time; 6:00 am Pacific Time; 2:00 pm UK Time; 4:00 pm Israel Time 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: 1-888-782-4291 (US) and +972-3-925-5925 (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, 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 provides these services to more than 500 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 successfully integrate the teleports we acquired, and (iv) 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, 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 Year ended Three months ended Dec-31 Dec-31 Dec-31 Dec-31 2008 2007 2008 2007 Revenues $ 78,993 $ 59,221 $ 21,954 $ 16,332 Cost of revenues 53,499 38,419 14,706 10,769 Gross profit 25,494 20,802 7,248 5,563 Operating expenses Sales and marketing 3,892 3,017 1,074 842 General and administrative 6,582 5,767 1,680 1,466 Total operating expenses 10,474 8,784 2,754 2,308 Operating income 15,020 12,018 4,494 3,255 Interest and marketable securities income 1,111 2,631 15 720 Currency fluctuation and other financing income (expenses), net 177 329 (153) 211 Changes in fair value of embedded currency conversion derivatives 1,342 (646) 1,188 (420) Other income, net 10 4 (2) - Income before taxes on income 17,660 14,336 5,542 3,766 Income taxes 4,228 2,932 1,957 553 Net income $ 13,432 $ 11,404 $ 3,585 $ 3,213 Income per Ordinary Share Basic income per Ordinary Share 0.78 0.66 0.21 0.19 Diluted income per Ordinary Share 0.77 0.65 0.21 0.18 Weighted average number of Ordinary Shares used to compute basic income per Ordinary Share 17,290,099 17,249,710 17,300,109 17,271,941 Weighted average number of Ordinary Shares used to compute diluted income per Ordinary Share 17,399,375 17,418,180 17,350,765 17,472,282 RRsat Global Communications Network Ltd. and its Subsidiaries Reconciliation of Adjusted Net Income and Adjusted EBITDA In thousands except per share data Year ended Three months ended Dec-31 Dec-31 Dec-31 Dec-31 2008 2007 2008 2007 Reconciliation of Net Income to Adjusted Net Income: Net income - as reported $ 13,432 $ 11,404 $ 3,585 $ 3,213 Non-cash equity-based compensation charge 415 411 103 102 Changes in fair value of embedded currency conversion derivatives (1,342) 646 (1,188) 420 Change in deferred tax on embedded derivatives 362 (181) 320 (115) Adjusted net income $ 12,867 $ 12,280 $ 2,820 $ 3,620 Adjusted net income per diluted ordinary share $ 0.74 $ 0.71 $ 0.16 $ 0.21 Reconciliation of Net Income to Adjusted EBITDA: Net income - as reported $ 13,432 $ 11,404 $ 3,585 $ 3,213 Interest and marketable securities income (1,111) (2,631) (15) (720) Currency fluctuation and other financial (income) expenses, net (177) (329) 153 (211) Changes in fair value of embedded currency conversion derivatives (1,342) 646 (1,188) 420 Other income, net (10) (4) 2 - Income tax expense 4,228 2,932 1,957 553 Non-cash equity-based compensation charge 415 411 103 102 Depreciation and amortization 3,971 2,979 1,201 810 Adjusted EBITDA $ 19,406 $15,408 $ 5,798 $ 4,167 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Balance Sheets In thousands except share data As of As of Dec-31 Dec-31 2008 2007 Current assets Cash and cash equivalents $ 34,749 $ 28,409 Marketable securities 6,102 28,291 Accounts receivable: Trade (net of provision for doubtful accounts of $1,882 and $2,188 as of December 31, 2007 and 2008 respectively) 11,227 10,421 Other 417 518 Related parties - 14 Fair value of embedded currency conversion derivatives 2,234 1,303 Deferred taxes 552 711 Prepaid expenses 1,390 919 Total current assets 56,671 70,586 Deposits and long-term receivables 1,791 1,104 Marketable securities 5,743 6,722 Other assets and prepaid expenses 7,897 1,025 Assets held for employee severance payments 1,305 987 Fixed assets, at cost, less accumulated amortization 25,971 14,966 Goodwill 3,734 - Intangible Assets, at cost, less accumulated depreciation and amortization 1,375 - Total assets $ 104,487 $ 95,390 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Balance Sheets (cont'd) In thousands except share data As of As of Dec-31 Dec-31 2008 2007 Liabilities and shareholders' equity Current liabilities Accounts payable: Trade $ 9,058 $ 5,040 Other 1,944 1,559 Fair value of embedded currency conversion derivatives 1,205 1,616 Related parties 25 26 Deferred income 5,091 5,191 Total current liabilities 17,323 13,432 Long - term liabilities Deferred income 6,689 5,169 Liability in respect of employee severance payments 1,378 1,011 Deferred taxes 747 619 Total long - term liabilities 8,814 6,799 Total liabilities 26,137 20,231 Commitments, contingent liabilities and liens Shareholders' equity Share capital: Ordinary share NIS 0.01 par value each (20,000,000 shares authorized as of December 31, 2007 and 2008; 17,286,762 and 17,306,783 shares issued and fully paid as of December 31, 2007 and 2008) 40 40 Additional paid in capital 52,106 51,691 Retained earnings 26,309 23,429 Accumulated other comprehensive loss (105) (1) Total shareholders' equity $ 78,350 $ 75,159 Total liabilities and shareholders' equity $ 104,487 $ 95,390 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Cash Flows In thousands Year ended Three months ended Dec-31 Dec-31 Dec-31 Dec-31 2007 2008 2007 2008 Cash flows from operating activities Net income $ 13,432 $ 11,404 $ 3,585 $ 3,213 Adjustments required to reconcile net income to net cash provided by operating activities: Deprecation and amortization 3,971 2,971 1,201 802 Provision for losses in accounts receivable 752 1,094 211 485 Deferred taxes 324 (329) 413 (169) Discount accretion and premium amortization of held- to- maturity securities, net (635) (1,361) (70) (416) Discount accretion and premium amortization of available- for- sale securities, net (246) (16) (68) (16) Changes in liability for employee severance payments, net 49 (10) (135) (121) Capital gains on sale of fixed assets, net (10) (4) 2 - Expenses in relation to options granted 415 411 103 102 Changes in fair value of embedded currency conversion derivatives (1,342) 646 (1,188) 420 Changes in assets and liabilities: Increase in accounts receivable - trade (1,558) (1,328) (2,964) (1,596) Decrease in related parties, net 13 49 47 60 Decrease (increase) in accounts receivable - other 101 279 (189) 568 Decrease (increase) in prepaid expenses (472) (696) (459) 175 Increase in deposits and long-term receivables (687) (86) (131) (292) Increase in accounts payable 4,236 128 2,161 677 Increase in deferred income 1,420 2,423 1,126 761 Net cash provided by operating activities $ 19,763 $ 15,575 $ 3,651 $ 4,653 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Cash Flows In thousands Year ended Three months ended Dec-31 Dec-31 Dec-31 Dec-31 2008 2007 2008 2007 Cash flows from investing activities Investment in fixed assets $ (14,942) $ (5,352) $ (2,304) $ (1,314) Investment in other assets (11,852) (1,033) (11,830) (28) Investment in securities available- for- sale (19,188) (3,048) - (3,048) Investment in securities held- to- maturity - (33,989) - 1,142 Decrease (increase) in trading securities, net 2,427 (2,015) 394 842 Proceeds from securities available- for- sale 17,980 1,062 13,980 1,062 Proceeds from securities held- to- maturity 22,689 5,807 3,182 4,216 Proceeds from sale of fixed assets 15 9 (2) (3) Net cash used in investing activities $ (2,871) $ (38,559) $ 3,420 $ (2,869) Cash flows from financing activities Increase in short term credit 0 (177) Dividend paid $ (10,552) $ - $ (5,020) $ - Net cash provided by (used in) financing activities $ (10,552) $ - $ (5,020) $ (177) Increase (decrease) in cash and cash equivalents $ 6,340 $ (22,984) $ 2,051 $ 7,345 Balance of cash and cash equivalents at beginning of Period $ 28,409 $ 51,393 $ 32,698 $ 21,064 Balance of cash and cash equivalents at end of Period $ 34,749 $ 28,409 $ 34,749 $ 28,409 A. Non-cash transactions Investment in fixed assets $ 306 $ 138 $ 142 $ (75) B. Supplementary cash flow information Income taxes paid $ 3,392 $ 3,650 $ 1,565 $ 711 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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