RRST (MM)

Revenues Increase 18% yoy to $22.5 Million; Adjusted net Income up 15% yoy and 48% From Prior Quarter to $4.1 Million; Board Declares Dividend Per Share of $0.17 RE'EM, Israel, August 3 /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 second quarter ended June 30, 2009. Second Quarter 2009 Highlights - Gross profit increased 18% yoy reaching $7.3 million; - Operating income reaches $4.3 million; adjusted EBITDA reaches $5.7 million; - Net income reaches $3.0 million; Adjusted net income reaches record $4.1 million; - Introduces third quarter guidance, forecasts sequential growth with revenues of $23.8 - $24.4 million; - Reiterates annual 2009 revenue guidance of $95 - 100 million; and - Board of Directors declares cash dividend of $3 million, or $0.17 per ordinary share. Second Quarter 2009 Results Revenues for the second quarter of 2009 totaled $22.5 million, an increase of 18% compared to $19.1 million in the second quarter of 2008. Gross profit for the second quarter of 2009 totaled $7.3 million, an increase of 18% compared to $6.2 million in the second quarter of 2008. Gross margins for the second quarter of 2009 totaled 32.5% compared to 32.4% in the second quarter of 2008. Operating income for the second quarter of 2009 totaled $4.3 million, an increase of 20% compared to $3.6 million in the second quarter of 2008. Net income on a GAAP basis, for the second quarter of 2009, was $3.0 million, compared to $3.3 million in the second quarter of 2008. Net income per diluted share on a GAAP basis was $0.17, compared to $0.19 in the first quarter of 2008. Adjusted EBITDA for the second quarter of 2009 totaled $5.7 million, an increase of 25% compared to $4.6 million in the second quarter of 2008. Adjusted net income for the second quarter of 2009 totaled $4.1 million, an increase of 15% compared to $3.6 million in the second quarter of 2008. Adjusted net income per diluted share, totaled $0.24 in the second quarter, compared to $0.20 in the second quarter of 2008. Backlog of signed agreements: During the quarter, the increased demand for new services contributed to the commencement of a net 9 new contracts, however, the macroeconomic environment drew a shortening in weighted average contract terms from 36 months on March 31, 2009 to 33 months at the end of June. The shortening in average contract length was the primary reason for the decline in backlog to $170 million as of June 30, 2009, compared to $177.8 million as of March 31, 2009. Cash, cash equivalents and marketable securities as at June 30, 2009 were $42.8 million, compared to $47.1 million as at March 31, 2009. During the quarter, the Company generated $2.8 million in operating cash flow, invested $1.7 million in capital expenditure, and paid out a dividend of $5.5 million in April 2009. Dividend Distribution On August 2, 2009, the Company's Board of Directors declared a cash dividend in the amount of $0.17 per ordinary share, and in the aggregate amount of approximately $3 million. The dividend will be payable on September 2, 2009 to all of the Company's shareholders of record at the end of the trading day on the NASDAQ on August 18, 2009. 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 Company's dividend policy is described in detail in the Company's Annual Report on Form 20-F for the year ended December 31, 2008. David Rivel, founder and CEO of RRsat commented, "This was another strong quarter for RRsat, with a continued increase in revenues, solid profitability margins and growth in profit levels compared to last year, and this, despite the uncertain operating environment. During the quarter, we saw increased demand for new services, commencing a net nine new contracts. Furthermore, this trend gathered speed in July as we commenced a larger number of new contracts. The macroeconomic environment, however, drew a shortening in the average length of new contracts, resulting in a decline in our end quarter backlog of orders. We believe that this will not negatively impact our revenue growth in the coming years." "Our healthy backlog and contract commencement during the quarter, as well as during the month of July, grants us the comfort to reiterate our 2009 annual revenue forecast of $95 - $100 million, with third quarter revenues increasing sequentially to the range of $23.8 - $24.3 million," concluded Mr. Rivel. Conference Call Information Conference call scheduled later today, August 3, 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: 1-888-407-2553 UK Dial-in Number: 0-800-917-5108 Israel Dial-in Number: 03-918-0610 International Dial-in Number: +972-3-918-0610 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. 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: 1-866-726-1002 (US) and +972-3-925-5939 (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, and other income (expenses), net, income tax expense 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 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, (iv) our ability to develop and commercialize the RRsat Global Internet TV service, (v) our expectation to extend the average length of our contracts in the future, (vi) our ability to report future successes and (vii) 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. 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, 2008 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 Six months ended Three months ended June 30 June 30 June 30 June 30 2009 2008 2009 2008 Revenues $ 44,794 $ 36,964 $ 22,473 $ 19,125 Cost of revenues 29,941 25,292 15,174 12,919 Gross profit 14,853 11,672 7,299 6,206 Operating expenses Sales and marketing 2,711 1,848 1,344 947 General and administrative 3,292 3,276 1,682 1,703 Total operating expenses 6,003 5,124 3,026 2,650 Operating income 8,850 6,548 4,273 3,556 Interest and marketable securities income 275 803 26 426 Currency fluctuation and other financing income, net 271 396 404 215 Changes in fair value of embedded currency conversion derivatives (932) (1,193) (1,375) (205) Other income, net 25 12 3 12 Income before taxes on income 8,489 6,566 3,331 4,004 Income taxes (2,510) (674) (346) (695) Net income $ 5,979 $ 5,892 $ 2,985 $ 3,309 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 2009 2008 2009 2008 Income per ordinary share Basic income per ordinary share $0.35 $0.34 $0.17 $0.19 Diluted income per ordinary share $0.34 $0.34 $0.17 $0.19 Weighted average number of ordinary shares used to compute basic income per ordinary share 17,306,783 17,286,762 17,306,783 17,286,762 Weighted average number of ordinary shares used to compute diluted income per ordinary share 17,412,806 17,423,834 17,418,707 17,397,133 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 2009 2008 2009 2008 Reconciliation of Net Income to Adjusted Net Income: Net income - as reported $ 5,979 $ 5,892 $ 2,985 $ 3,309 Non-cash equity-based compensation charge 208 207 104 103 Changes in fair value of embedded currency conversion derivatives 932 1,193 1,375 205 Change in deferred tax on embedded derivatives (242) (322) (357) (55) Adjusted net income $ 6,877 $ 6,970 $ 4,107 $ 3,562 Adjusted net income per diluted ordinary share $ 0.39 $ 0.40 $ 0.24 $ 0.20 Reconciliation of Net Income to Adjusted EBITDA: Net income - as reported $ 5,979 $ 5,892 $ 2,985 $ 3,309 Interest and marketable securities income (275) (803) (26) (426) Currency fluctuation and other financial income, net (271) (396) (404) (215) Changes in fair value of embedded currency conversion derivatives 932 1,193 1,375 205 Other income, net (25) (12) (3) (12) Income tax expense 2,510 674 346 695 Non-cash equity-based compensation charge 208 207 104 103 Depreciation and amortization 2,657 1,779 1,345 911 Adjusted EBITDA $11,715 $8,534 $5,722 $4,570 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Balance Sheets In thousands except share data June 30 December 31 2009 2008 Current assets Cash and cash equivalents $ 16,317 $ 34,749 Short term deposits 7,209 - Marketable securities 5,493 6,102 Accounts receivable: Trade (net of provision for doubtful accounts of $2,618 and $2,188 as of June 30, 2009 and December 31, 2008 respectively) 15,271 11,227 Other 560 417 Fair value of embedded currency conversion derivatives 1,744 2,234 Deferred taxes 946 552 Prepaid expenses 1,623 1,390 Total current assets 49,163 56,671 Deposits and long-term receivables 1,774 1,791 Marketable securities 13,784 5,743 Long term prepaid expenses 7,836 7,897 Assets held for employee severance payments 1,350 1,305 Fixed assets, at cost, less accumulated depreciation and amortization 27,550 25,993 Goodwill 3,734 3,734 Intangible assets, at cost, less accumulated amortization 1,376 1,353 Total assets $ 106,567 $ 104,487 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Balance Sheets (cont'd) In thousands except share data June 30 December 31 2009 2008 Liabilities and shareholders' equity Current liabilities Accounts payable: Trade $ 10,368 $ 8,709 Other 2,068 1,944 Fair value of embedded currency conversion derivatives 1,647 1,205 Related parties 42 25 Deferred income 4,627 5,440 Total current liabilities 18,752 17,323 Long - term liabilities Deferred income 6,412 6,689 Liability in respect of employee severance payments 1,511 1,378 Deferred taxes 818 747 Total long - term liabilities 8,741 8,814 Total liabilities 27,493 26,137 Commitments, contingent liabilities and liens Shareholders' equity Share capital: Ordinary share NIS 0.01 par value each (20,000,000 shares authorized as of June 30, 2009 and December 31, 2008; 17,306,783 shares issued and fully paid as of June 30, 2009 and December 31, 2008) 40 40 Additional paid in capital 52,314 52,106 Retained earnings 26,750 26,309 Accumulated other comprehensive loss (30) (105) Total shareholders' equity $ 79,074 $ 78,350 Total liabilities and shareholders' equity $ 106,567 $ 104,487 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Cash Flows In thousands Six months ended Three months ended June 30 June 30 June 30 June 30 2009 2008 2009 2008 Cash flows from operating activities Net income $ 5,979 $5,892 $ 2,985 $ 3,309 Adjustments required to reconcile net income to net cash provided by operating activities Depreciation and amortization 2,657 1,779 1,345 911 Provision for losses in account receivable 430 369 256 214 Deferred taxes (349) (367) (345) (76) Discount accretion and premium amortization of held- to- maturity securities, net (90) (385) (137) (148) Discount accretion and premium amortization of available- for- sale securities, net 56 (120) 145 (78) Changes in liability for employee severance payments, net 88 171 3 43 Capital gains on sale of fixed assets, net (25) (12) (3) (12) Stock- based compensation 208 207 104 103 Changes in fair value of embedded currency conversion derivatives 932 1,193 1,375 205 Profit from trading securities, net (205) (314) (109) (164) Changes in assets and liabilities: Decrease (increase) in account receivable - trade (4,635) 1,330 (2,208) (327) Decrease (increase) in related parties, net 17 (28) 25 (6) Decrease (increase) in account receivable - other (143) (326) (673) 156 Decrease (increase) in prepaid expenses (233) (371) (57) 858 Increase (decrease) in deposits and long-term receivables 17 (504) 16 (82) Increase in account payables 1,638 866 10 655 Increase (decrease) in deferred income (1,090) (540) 31 (347) Net cash provided by operating activities $ 5,252 $ 8,840 $ 2,763 $ 5,214 RRsat Global Communications Network Ltd. and its Subsidiaries Consolidated Statements of Cash Flows In thousands Six months ended Three months ended June 30 June 30 June 30 June 30 2009 2008 2009 2008 Cash flows from investing activities Investment in fixed assets $ (3,897) $ (8,024) $(1,688) $(6,070) Investment in other assets - (20) - (10) Investment in short term deposits (7,209) - (3,300) - Payment in respect of acquisition of activity - (3,425) - (3,425) Investments in securities available- for- sale (11,447) (10,393) (5,905) (1,500) Decrease in trading securities, net 68 1,811 18 1,378 Proceeds from securities available- for- sale 1,070 4,000 1,070 2,000 Proceeds from securities held to maturity 3,217 16,460 19 7,635 Proceeds from sale of fixed assets 52 17 1 17 Net cash provided by (used in) investing activities $ (18,146) $ 426 $(9,785) $ 25 Cash flows from financing activities Dividend paid $ (5,538) $ (5,532) $ (5,538) $(5,532) Net cash used in financing activities $ (5,538) $ (5,532) $ (5,538) $ (5,532) Increase (decrease) in cash and cash equivalents $ (18,432) $ 3,734 $ (12,560) $ (293) Balance of cash and cash equivalents at beginning of period 34,749 28,409 28,877 32,436 Balance of cash and cash equivalents at end of period $ 16,317 $ 32,143 $ 16,317 $32,143 A. Non-cash transactions Investment in fixed assets $ 451 $ 77 $ 451 $ 77 Investment in intangible assets $ 161 $ - $ 161 $ - B. Supplementary cash flow information Income taxes paid $ 2,911 $ 1,442 $ 1,326 $ 535 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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