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PRESS RELEASES
OMER, Israel, May 5 /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 March 31, 2008.
First Quarter Highlights (compared to first quarter 2007)
- Revenues increased 34%, reaching $17.8 million
- Adjusted net income up 26%, reaching $3.4 million (GAAP net
income, $2.6 million)
- Cash, cash equivalents and marketable securities further
increased to $65.5 million
- Backlog reached record level of $158.8 million as of March
31, 2008
- Completed acquisition of a U.S. teleport
- Signed agreement to acquire Israel's largest teleport
- Board of Directors declared cash dividend of $5.5 million,
or $0.32 per ordinary share
First Quarter 2008 Results:
Revenues for the first quarter of 2008 totaled a record $17.8 million, an
increase of 34% compared to $13.3 million in the first quarter of 2007.
Backlog of signed agreements, as of March 31, 2008, reached a record
$158.8 million, a further increase of $3.3 million from the $155.5 million
backlog of signed agreements as of December 31, 2007.
Operating income for the first quarter of 2008 totaled $3.0 million, a
10% increase compared to $2.7 million in the first quarter of 2007.
Adjusted net income for the first quarter of 2008 totaled $3.4 million,
an increase of 26% compared to $2.7 million in the first quarter of 2007.
Adjusted net income per diluted share totaled $0.20, compared to $0.16 in the
first quarter of 2007.
Net income on a GAAP basis for the first quarter of 2008 was $2.6
million, compared to $2.6 million, in the first quarter of 2007. Net income
per diluted share on a GAAP basis was $0.15, compared to $0.15 in the first
quarter of 2007.
Adjusted EBITDA for the first quarter of 2008 totaled $4.0 million, an
increase of 14% compared to $3.5 million in the first quarter of 2007.
Cash, cash equivalents and marketable securities as at March 31, 2008
were $65.5 million, compared with $63.4 million as at December 31, 2007.
During the quarter, the Company generated $3.8 million in operating cash flow.
Acquisition of Hawley Teleport in Pike County, Pennsylvania
On May 1, 2008, RRsat completed the acquisition of the assets of the
Hawley Teleport located in Pike County, Pennsylvania, for a purchase price of
$4.25 million. RRsat acquired all the property, assets and licenses of the
Teleport from Skynet Satellite Corporation. The Hawley Teleport, formerly
owned by satellite operator Loral Skynet, includes approximately 200 acres, a
communication building on the premises of a size of approximately 40,000 sq.
ft, communications equipment and antennas, in which substantial resources
have been invested during the teleport's 33 years of operation. The
acquisition is expected to contribute to the Company's results from 2009
onwards as the Company leverages the acquisition as well as its global
network to generate additional revenues. The impact on 2008 results is
expected to be minimal as the revenue contribution and associated expenses
are expected to be offset throughout the year.
Dividend Distribution
On May 4, 2008, the Company's Board of Directors declared a cash dividend
in the amount of $0.32 per ordinary share, and in the aggregate amount of
approximately $5.5 million. The dividend will be payable on June 2, 2008 to
all of the Company's shareholders of record at the end of the trading day on
NASDAQ on May 19, 2008. According to the Israeli tax law, the Company will
deduct 20% of the dividend amount payable to each shareholder, subject to
applicable exemptions. The amount of dividend declared does not necessarily
reflect dividends for future periods, which may change in accordance with the
Company's dividend policy. The dividend policy is described in detail in the
Company's Annual Report on Form 20-F for the year ended December 31, 2007.
David Rivel, CEO of RRsat commented, "The first quarter of 2008 has been
a true milestone quarter in terms of putting in place the foundations for
long term growth and expansion. During the quarter we announced two
acquisitions, the first being the Hawley Teleport in Pike County,
Pennsylvania, which was completed on May 1st, and the second being the
satellite business and the largest teleport in Israel, previously owned by
Israel's national telecommunications company, Bezeq, which is expected to
close in the third quarter of 2008. Both acquisitions will serve as major
building blocks in our growth and expansion strategy. In addition, during the
quarter we introduced new and innovative services to our customers with the
launch of our new High-Definition playout services center, as well as the
offering of new services for television over internet."
"On the financial front, this quarter we continued to generate strong
revenue growth with backlog growing further to new record levels offering us
visibility in 2008 and beyond. Furthermore, we continued to generate healthy
cash flow, which will support our expansion strategy. Looking ahead, 2008
looks to be a truly exciting year for the company in terms of growth,
expansion and identifying new opportunities, while constantly leveraging our
premier global network to offer advanced and cutting edge solutions to our
broad, ever growing, global customer base. We reiterate our 2008 annual
revenue guidance of $75 to $76 million, and introduce second quarter revenue
guidance of $18.3 - $18.7 million," concluded Mr. Rivel.
Conference Call Information
Conference call scheduled later today, May 5, 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: 1-888-407-2553
UK Dial-in Number: 0-800-917-9141
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: +1-877-456-0009 (US) and +972-3-925-5928 (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 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
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
Three months ended
March 31 March 31
2008 2007
Revenues $ 17,839 $ 13,275
Cost of revenues 12,373 8,470
Gross profit 5,466 4,805
Operating expenses
Sales and marketing 901 662
General and administrative 1,573 1,435
Total operating expenses 2,474 2,097
Operating income 2,992 2,708
Interest and marketable
securities income 377 569
Currency fluctuation and
other financing income, net 181 8
Changes in fair value of
embedded currency
conversion derivatives (988) 28
Income before taxes on
income 2,562 3,313
Income taxes 21 (688)
Net Income $ 2,583 $ 2,625
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Statements of Operations (cont'd)
In thousands, except share data
Three months ended
March 31 March 31
2008 2007
Income per ordinary share
Basic income per ordinary
share 0.15 0.15
Diluted income per
ordinary share 0.15 0.15
Weighted average number
of ordinary shares used to
compute basic income per
ordinary share 17,286,762 17,242,300
Weighted average number
of ordinary shares used to
compute diluted income
per ordinary share 17,444,149 17,313,715
RRsat Global Communications Network Ltd and its subsidiaries
Reconciliation of Adjusted Net Income and Adjusted EBITDA
in thousands
Three months ended
March March
31 31
2008 2007
Reconciliation of Net Income to Adjusted Net
Income:
Net income - as reported $ 2,583 $ 2,625
Non-cash equity-based compensation charge 104 105
Changes in fair value of embedded currency
conversion derivatives 988 (28)
Change in deferred tax on embedded derivatives (267) 8
Adjusted net income $ 3,408 $ 2,710
Adjusted net income per diluted ordinary share $ 0.20 $ 0.16
Reconciliation of Net Income to Adjusted EBITDA:
Net income - as reported $ 2,583 $ 2,625
Interest and marketable securities income (377) (569)
Currency fluctuation and other financial
(income) expenses, net (181) (8)
Changes in fair value of embedded currency
conversion derivatives 988 (28)
Income tax expense (21) 688
Non-cash equity-based compensation charge 104 105
Depreciation and amortization 868 670
Adjusted EBITDA $ 3,964 $ 3,483
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Balance Sheets
In thousands, except share data
As of As of
March December
31 31
2008 2007
Current assets
Cash and cash equivalents $ 32,436 $ 28,409
Marketable securities 29,382 28,291
Accounts receivable:
Trade (net of provision for
doubtful account of $ 2,037
and $ 1,882 as of March 31, 2008
and December 31, 2007, respectively) 8,609 10,421
Other 1,000 518
Fair value of embedded currency
conversion derivatives 1,775 1,303
Related parties 10 14
Deferred taxes 1,058 711
Prepaid expenses 2,148 919
Total current assets 76,418 70,586
Deposits and long-term receivables 1,526 1,104
Marketable securities 3,695 6,722
Prepaid expenses 1,033 1,025
Assets held for employee severance payments 1,100 987
Fixed assets, at cost, less accumulated
depreciation and amortization 16,026 14,966
$ 99,798 $ 95,390
Total assets
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Balance Sheets (cont'd)
As of As of
March December
31 31
2008 2007
Liabilities and shareholders' equity
Current liabilities
Account payable:
Trade $ 5,569 $ 5,040
Other 1,213 1,559
Fair value of embedded currency
conversion derivatives 3,076 1,616
Related parties - 26
Deferred income 4,019 5,191
Total current liabilities 13,877 13,432
Long-term liabilities
Deferred income 6,148 5,169
Liability in respect of employee severance payments 1,252 1,011
Deferred taxes 675 619
Total long-term liabilities 8,075 6,799
Total liabilities 21,952 20,231
Shareholders' equity
Share capital
Ordinary share NIS 0.01 par value each (20,000,000
authorized as of March 31, 2008 and December 31, 2007,
17,286,762 shares issued and fully paid as of
March 31, 2008 and 17,242,300 as of December 31, 2007) 40 40
Additional paid in capital 51,795 51,691
Retained earnings 26,012 23,429
Accumulated other comprehensive loss (1) (1)
Total shareholders' equity 77,846 75,159
Total liabilities and shareholders' equity $ 99,798 $ 95,390
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Statements of Cash Flows
In thousands
Three months ended
March March
31 31
2008 2007
Cash flows from operating activities
$ 2,583 $ 2,625
Net income
Adjustments required to reconcile net income
to net cash provided by operating activities
Depreciation and amortization 868 670
Provision for losses in account receivable 155 241
Deferred taxes (291) (43)
Discount accretion and premium amortization
of held- to- maturity securities, net (237) (154)
Discount accretion and premium amortization
of available- for- sale securities, net (42) -
Changes in liability for employee severance
payments, net 128 108
Expenses in relation of options granted 104 105
Changes in fair value of embedded currency
conversion derivatives 988 (28)
Changes in assets and liabilities:
Decrease (increase) in account receivable - trade 1,657 496
Decrease (increase) in related parties, net (22) (78)
Decrease (increase) in account receivable - other (482) (167)
Increase in prepaid expenses (1,229) (726)
Decrease (increase) in deposits and long-term
receivables (422) 170
Increase (decrease) in account payables 211 (219)
Increase (decrease) in deferred income (193) (508)
Net cash provided by operating activities $ 3,776 $ 2,492
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Statements of Cash Flows (cont'd)
In thousands
Three months ended
March 31 March 31
2008 2007
Cash flows from investing activities
$ (1,954) $ (771)
Investment in fixed assets
Investment in other assets (10) -
Investments in securities available- for- sale (8,893) -
Investments in securities held to maturity - (25,178)
Decrease (increase) in trading securities, net 283 (3,124)
Proceeds from securities available- for- sale 2,000 -
Proceeds from securities held to maturity 8,825 -
Net cash provided by (used in) investing
activities $ 251 $ (29,073)
Cash flows from financing activities
Net cash provided by financing activities $ - $ -
Increase (decrease) in
cash and cash equivalents $ 4,027 $ (26,581)
Balance of cash and cash equivalents at
beginning of period 28,409 51,393
Balance of cash and cash equivalents at end
of period $ 32,436 $ 24,812
A. Non-cash transactions
Investment in fixed assets $ 110 $ -
B. Supplementary cash flow information
Income taxes paid $ 907 $ 1,008
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
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