RRsat Presents 31% Increase in Adjusted Net Income in Second Quarter 2008; Increases Annual Guidance

RRsat Presents 31% Increase in Adjusted Net Income in Second Quarter 2008; Increases Annual Guidance

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 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     investors@rrsat.com      External Investor Relations Contacts:     Ehud Helft / Kenny Green     Tel: +1-646-201-9246     info@gkir.com  

Source: RRSat Global Communications Network Ltd

Company Contact Information: Gil Efron, CFO, Tel: +972-8-861-0000, investors@rrsat.com; External Investor Relations Contacts: Ehud Helft / Kenny Green, Tel: +1-646-201-9246, info@gkir.com

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