RRsat Achieves Record Revenue and Operating Income in Fourth Quarter 2008

RRsat Achieves Record Revenue and Operating Income in Fourth Quarter 2008

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     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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