RRsat Reports First Quarter 2012 Adjusted Net Income Increases by 10.2% Over Last Year

RRsat Reports First Quarter 2012 Adjusted Net Income Increases by 10.2% Over Last Year

Adjusted Net Income Totaled $1.9 Million

AIRPORT CITY BUSINESS PARK, Israel, May 17, 2012/PRNewswire-FirstCall/ --

2012 First Quarter Highlights




- Revenues totaled $27.5 million, increasing by 2% year over year.
- Adjusted Fully diluted earnings per share of $0.11 compared to $0.10 last
year.
- Adjusted EBITDA of $4.2 million, increasing by 5.7% from last year.
- Backlog as of March 31, 2012 at $194 million.
- Second quarter revenue guidance of $28.0 - $29.0 million.




RRsat Global Communications Network Ltd. (NASDAQ: RRST), a leading provider of
comprehensive content management and global distribution services to the television and
radio broadcasting industries, today announced its financial results for the first quarter
ended March 31, 2012.



First Quarter 2012 Results:



Revenues in the first quarter of 2012 totaled $27.5 million, a 2.0% increase compared
with $26.9 million in the first quarter of 2011 and a decrease of 4.7% compared with $28.8
million in the previous quarter.



Gross profit in the first quarter of 2012 totaled $6.1 million, compared with $6.2
million in the first quarter of 2011 and $6.9 million in the previous quarter. Gross
margin in the first quarter of 2012 was 22.3%, compared with 23.0% in the same quarter
last year and 23.8% in the previous quarter.



Operating income for the first quarter of 2012 totaled $2.0 million, representing an
operating margin of 7.1%, compared with $2.0 million in the first quarter of 2011,
representing an operating margin of 7.4%. Operating income in the previous quarter totaled
$2.4 million, representing an operating margin of 8.5%.



Net income on a GAAP basis for the first quarter of 2012 was $2.3 million, compared
with $0.9 million in the first quarter of 2011 and $1.6 million in the previous quarter.
Fully diluted earnings per share on a GAAP basis for the first quarter of 2012 was $0.13,
compared with $0.05 in the first quarter of 2011 and $0.09 in the previous quarter.



Adjusted net income totaled $1.9 million for the first quarter of 2012, compared with
$1.7 million in the first quarter of 2011 and $1.5 million in the previous quarter.
Adjusted fully diluted earnings per share totaled $0.11 in the first quarter of 2012,
compared with $0.10 in the first quarter of 2011 and $0.09 in the previous quarter.



Adjusted EBITDA for the first quarter of 2012 totaled $4.2 million, compared with $4.0
million in the first quarter of 2011 and $4.9 million in the previous quarter.



Cash, cash equivalents and marketable securities as of March 31, 2012 totaled $34.4
million, an increase of $1.2 million compared with $33.2 million as of December 31, 2011.
The net increase in the cash balance is mainly attributable to a positive cash flow from
operating activities of $3.1 million less capital expenditures of $2.3 million.



Backlog of signed agreements, as of March 31, 2012, totaled $194 million, including
$69.1 million of revenues expected to be recognized during the remainder of 2012, compared
with a backlog of $194 million at the end of the previous quarter.



Guidance for revenue in the second quarter of 2012 is in the range of $28.0 - $29.0
million, and for full year 2012 remains in the range of $115 - $121 million. Guidance for
gross margin in the second quarter of 2012 is in the range of 22.5 - 23.5%.



David Rivel, CEO of RRsat commented, "As we noted in the fourth quarter 2011
conference call, our first quarter results were mainly impacted by the ending of a large
TV project which reduced our revenues compared with the previous quarter and resulted in
excess capacity that had a negative impact on our margins. However, we are seeing a
healthy contract pipe line and expect to be back to sequential growth and better gross
margins by the second quarter. As anticipated, we are also seeing a reduction in our
capital expenditures level and this will continue to have a positive impact on our free
cash flow."



Mr. Rivel continued, "We otherwise had some positive activities at the Company during
the quarter including the activation of five new services, with each contract worth over
one million dollars. We also announced the extension of our contract with the Vietnam TV
channel for global distribution, as well as signing a contract with ETV, one of India's
largest networks of satellite TV channels. We are expanding our presence in the ever
growing sports market, having signed an agreement with international sports broadcaster,
Setanta, for the distribution of a Russian version of its sports channel across Russian
speaking countries. And finally, we extended our contract with Baby TV, which is part of
FOX International, a major broadcaster. Looking ahead to 2012, I believe we are on track
with our strategy and goal of offering superior services to a larger group of customers,
including major television networks."



Conference Call Information



Conference call scheduled later today, May 17, 2012 at 9:00 am ET (4:00 pm Israel
time). On the call, Mr. David Rivel, Founder & CEO, Dr. Shlomo Shamir, Chairman, Mr.
Itzhak Zion, CFO, and Mr. Lior Rival, VP Sales and Marketing, 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: 1-888-668-9141
UK Dial-in Number: 0-800-917-5108
Israel Dial-in Number: 03-918-0609
International Dial-in Number: +972-3-918-0609
at:
9:00 am Eastern Time; 6:00 am Pacific Time; 2:00 pm UK Time; 4:00 pm Israel
Time




Replay



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:



1-888-782-4291 (US) and +972 3-925-5904 (International).



Use of Non-GAAP Financial Measures



In addition to the GAAP results included in this press release, RRsat has also
included non-GAAP measurements of results. RRsat uses three financial measures, adjusted
net income, adjusted net income per share and adjusted EBITDA, which are non-GAAP
financial measures. RRsat believes that these non-GAAP financial measures are principal
indicators of the operating and financial performance of its business. We have provided
these non-GAAP measurements to help investors better understand our core operating
performance and enhance comparisons of core operating performance from period to period.



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 FASB ASC
Topic 718, non-cash expense resulting from amortization of acquired intangible assets,
non-cash income (loss) reflecting changes in the fair value of embedded currency
conversion derivatives resulting from the application of FASB ASC Topic 815 and the
resulting income tax (increase) decrease of the above items.



The company has excluded intangible assets amortization expense from its non-GAAP net
income measurements, primarily because it represents a significant non-cash expense and
because the company evaluates its performance excluding intangible assets amortization
expense. Amortization of intangible assets is consistent in amount and frequency but is
significantly affected by the timing and size of the company's acquisitions. Investors
should note that the use of intangible assets contributed to the Company's revenues earned
during the periods presented and will contribute to the Company's future period revenues
as well. Intangible assets amortization expense will recur in future periods.



Adjusted EBITDA is calculated by adding to operating income, non-cash equity-based
compensation charge, depreciation and amortization. Management uses these non-GAAP
financial measures to assess its operational performance, for financial and operational
decision-making, and as a means to evaluate period-to-period comparisons on a consistent
basis. Management believes that these non-GAAP financial measures provide meaningful
supplemental information regarding the Company's performance by excluding certain non-cash
expenses that are not directly attributable to its core operating results.



The non-GAAP measurements are intended only as a supplement to the comparable GAAP
measurements and the company compensates for the limitations inherent in the use of
non-GAAP measurements by using GAAP measures in conjunction with the non-GAAP
measurements. As a result, investors should consider these non-GAAP measurements in
addition to, and not in substitution for, or as superior to, measurements of financial
performance prepared in accordance with GAAP.



The Company expects to continue reporting non-GAAP financial measures, adjusting for
the items described above, and the Company expects to continue to incur expenses similar
to the non-cash, non-GAAP adjustments described above. Accordingly, the exclusion of these
and other similar items in the presentation of non-GAAP financial measures should not be
construed as an inference that these costs are unusual, infrequent or non-recurring.
Moreover, because not all companies use identical measures and calculations, the
presentation of adjusted net income, adjusted net income per share and adjusted EBITDA may
not be comparable to other similarly titled measures of other companies. These limitations
are compensated for by using adjusted net income and adjusted EBITDA in conjunction with
traditional GAAP financial measures.



Reconciliations of the non-GAAP measures (adjusted net income and adjusted EBITDA) to
the most comparable GAAP measures (net income and operating income respectively), are
provided in the schedules attached to this release.



About RRsat Global Communications Network Ltd.



RRsat Global Communications Network Ltd. (NASDAQ: RRST) provides global, end-to-end,
content management and distribution services to the rapidly expanding television and radio
broadcasting industries, covering more than 150 countries. Through its RRsat Global
Network, composed of satellite and terrestrial fiber optic capacity and the public
Internet, RRsat provides high-quality and flexible global distribution services 24/7 to
more than 630 channels reaching multiplatform operators, Internet TV and direct-to-home
viewers worldwide and also offers occasional use services for sports, news and events with
a fleet of flyaways and over 10 transportable satellite news gathering services (SNG)
units. More than 130 television and radio channels use RRsat's advanced production and
playout centers comprising comprehensive media asset management services. Visit the
company's website http://www.rrsat.com



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) guidance for revenue for the
second quarter of 2012 and full year 2012 and gross margin in the second quarter of
2012;(ii) our expectations to decrease capital expenditures in 2012, and the corresponding
effect on free cash flow;(iii) our planned expectations of our direct sales to North
America, Africa Africa and Asia; (iv) our goal of offering superior services to a larger
group of customers, including major television networks; (v) our expectation to expand our
client base and sell additional services to our existing client base; (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, 2011 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
Three months Year
ended ended
---------------------- ---------- March March December
31 31 31
2012 2011 2011
----------- ----------- ----------
Revenues $ 27,459 $ 26,930 $ 112,920
Cost of revenues 21,325 20,737 86,939
----------- ----------- ---------- Gross profit 6,134 6,193 25,981
Operating expenses
Sales and marketing 1,611 1,744 7,067
General and administrative 2,570 2,447 10,130
----------- ----------- ---------- Total operating expenses 4,181 4,191 17,197
----------- ----------- ----------
Operating income 1,953 2,002 8,784
Interest and marketable securities income 154 116 400
Currency fluctuation and other financing
income (expenses), net 160 190 (740)
Changes in fair value of embedded currency
conversion derivatives 627 (1,000) (2,130)
Other expenses, net - - (1)
----------- ----------- ----------- Income before taxes on income 2,894 1,308 6,313
Income taxes (616) (439) (1,978)
----------- ----------- -----------
Net income $ 2,278 $ 869 $ 4,335
=========== =========== ===========
Earning per Ordinary Share
Basic earning per Ordinary Share 0.13 0.05 0.25
=========== =========== ===========
Diluted earning per Ordinary Share 0.13 0.05 0.25
=========== =========== ===========
Weighted average number of Ordinary
Shares used to compute basic earning per
Ordinary Share 17,346,561 17,346,561 17,346,561
=========== =========== ===========
Weighted average number of Ordinary
Shares used to compute diluted earning per
Ordinary Share 17,346,561 17,359,092 17,346,561
=========== =========== ===========




RRsat Global Communications Network Ltd. and its Subsidiaries




Reconciliation of Adjusted Net Income and Adjusted EBITDA





In thousands except per share data
Three months ended
----------------------
March March
31 31
2012 2011
Reconciliation of Net Income to Adjusted Net --------- ---------
Income:
Net income - as reported $ 2,278 $ 869
Non-cash equity-based compensation charge 43 25
Intangible assets amortization expense 50 60
Changes in fair value of embedded currency
conversion derivatives (627) 1,000
Change in deferred tax on embedded derivatives 157 (240)
--------- ---------
Adjusted net income $ 1,901 $ 1,714
========= =========
Adjusted net income per diluted ordinary share $ 0.11 $ 0.10
Reconciliation of Net Income to Adjusted EBITDA:
Operating income $ 1,953 $ 2,002
Non-cash equity-based compensation charge 43 25
Depreciation and amortization 2,205 1,948
--------- ---------
Adjusted EBITDA $ 4,201 $ 3,975
========= =========




RRsat Global Communications Network Ltd. and its Subsidiaries



Consolidated Balance Sheets




In thousands except share data
March December
31 31
2012 2011
---------- ----------
Current assets
Cash and cash equivalents $ 17,082 $ 14,443
Marketable securities 17,291 18,764
Accounts receivable:
Trade (net of provision for doubtful accounts of $7,572
and $6,892 as of March 31, 2012 and December 31, 2011
respectively) 20,255 19,402
Other 1,201 686
Fair value of embedded currency conversion derivatives 260 206
Deferred taxes 2,399 2,449
Prepaid expenses 2,375 2,223
---------- ----------
Total current assets 60,863 58,173
Fair value of embedded currency conversion
derivatives 330 591
Deposit and long- term prepaid expenses 2,090 2,043
Long-term land lease prepaid expenses 7,630 7,642
Assets held for employee severance payments 1,854 1,757
Fixed assets, at cost, less accumulated depreciation
and amortization 44,524 45,495
Goodwill 3,734 3,734
Intangible Assets, at cost, less accumulated amortization 519 586
---------- ----------
Total assets $ 121,544 $ 120,021
========== ==========




RRsat Global Communications Network Ltd. and its Subsidiaries



Consolidated Balance Sheets (cont'd)




In thousands except share data

March 31 December 31
2012 2011
--------- -----------
Liabilities and shareholders' equity
Current liabilities
Accounts payable:
Trade $ 10,705 $ 11,547
Dividend Payable 3,990 -
Other 2,458 2,335
Fair value of embedded currency
conversion derivatives 536 990
Deferred income 8,817 8,787
---------- ----------
Total current liabilities 26,506 23,659
---------- ----------
Long - term liabilities
Deferred income 7,463 7,192
Fair value of embedded currency
conversion derivatives 600 980
Liability in respect of employee
severance payments 1,931 1,819
Deferred taxes 1,837 1,664
---------- ----------
Total long - term liabilities 11,831 11,655
---------- ----------
Total liabilities 38,337 35,314
---------- ----------
Commitments, contingent liabilities
and liens
Shareholders' equity
Share capital:
Ordinary share NIS 0.01 par value each
(20,000,000 shares authorized as of
March 31, 2012 and December 31, 2011;
17,346,561 shares issued and fully
paid as of March 31, 2012 and
December 31, 2011) 40 40
Additional paid in capital 53,053 53,010
Retained earnings 30,015 31,727
Accumulated other comprehensive income (loss) 99 (70)
---------- ----------
Total shareholders' equity $ 83,207 $ 84,707
---------- ----------
Total liabilities and shareholders' equity $ 121,544 $ 120,021
========== ==========




RRsat Global Communications Network Ltd. and its Subsidiaries



Consolidated Statements of Cash Flows




In thousands

Three months ended Year ended
------------------------ ------------
March 31 March 31 December 31
2012 2011 2011
Cash flows from operating activities ---------- ------------ ------------
Net income $ 2,278 $ 869 $ 4,335
Adjustments required to reconcile net
income to net cash provided by operating
activities:
Depreciation and amortization 2,205 1,948 8,477
Provision for losses in accounts receivable 680 594 2,217
Deferred taxes 166 234 248
Discount accretion and premium amortization
of available- for- sale securities, net (113) (106) (325)
Changes in liability for employee severance
payments, net 15 11 19
Capital loss on sale of fixed assets, net - - 1
Stock-based compensation 43 25 117
Changes in fair value of embedded currency
conversion derivatives (627) 1,000 2,130
Loss (Profit) from trading securities, net (46) (10) 158
Changes in assets and liabilities:
Increase in account receivable - trade (1,533) (536) (1,759)
Decrease (increase) in account receivable
- other (515) (41) 626
Increase in prepaid expenses (152) (429) (78)
Decrease (increase) in deposits and
long-term prepaid expenses (47) (34) 158
Increase in account payable 438 2,000 17
Increase (decrease) in deferred income 301 (2,056) (96)
--------- --------- ----------
Net cash provided by operating activities $ 3,093 $ 3,469 $ 16,245
--------- --------- ----------




RRsat Global Communications Network Ltd. and its Subsidiaries



Consolidated Statements of Cash Flows



In thousands




Three months ended Year ended
---------- ---------- -----------
March 31 March 31 December 31
2012 2011 2011
---------- ---------- -----------
Cash flows from investing activities
Investment in fixed assets $ (2,330) $ (6,534) $ (14,657)
Investment in long term prepaid expenses (13) (13) (27)
Investment in available-
for- sale securities (2,777) (3,523) (8,005)
Decrease (increase) in trading
securities, net 1,512 30 (231)
Proceeds from sale of securities available-
for- sale 3,123 5,295 12,161
Proceeds from sale of fixed assets 31 - 29
---------- ---------- ----------
Net cash used in investing activities $ (454) $ (4,745) $ (10,730)
---------- ---------- ----------
Cash flows from financing activities
Dividend paid - $ (2,602) $ (4,163)
---------- ---------- ----------
Net cash used in financing activities - $ (2,602) $ (4,163)
---------- ---------- ----------
Increase (decrease) in cash and cash
equivalents $ 2,639 $ (3,878) $ 1,352
Balance of cash and cash equivalents
at beginning of Period $ 14,443 $ 13,091 $ 13,091
---------- ---------- ----------
Balance of cash and cash equivalents
at end of Period $ 17,082 $ 9,213 $ 14,443
========== ========== =========
A. Non-cash transactions
Investment in fixed assets $ 136 $ 2,140 $ 1,293
========== ========== =========
Dividend payable $ 3,990 - -
========== ========== =========
B. Supplementary cash flow information
Income taxes paid $ 610 $ 383 $ 1,694
========== ========== =========





Company Contact Information:
Itzhak Zion, CFO
Tel: +972-3-928-0777
Email: investors@rrsat.com

External Investor Relations Contacts:
Ehud Helft / Porat Saar
Tel: 1-646-233-2161
rrsat@ccgisrael.com





Source: RRSat Global Communications Network Ltd




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