RRsat Second Quarter 2010 Revenue Increases 14.2%, Year Over Year, Totalling $25.7 Million

RE'EM, Israel, Aug. 5 /PRNewswire-FirstCall/ --

Second Quarter 2010 Highlights

• Revenues for the second quarter increased 14.2% reaching $25.7 million
• Gross margins reached 29.1% and operating margins totaled 14.6%
• Third quarter revenue guidance of $25 - $26 million
• Ten year strategic alliance announced with BT's media and broadcast division

RRsat Global Communications Network Ltd. (Nasdaq: RRST), a 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 of 2010.

Second Quarter 2010 Results:

Revenues for the second quarter of 2010 totaled $25.7 million, an increase of 14.2% compared to $22.5 million in the second quarter of 2009.

Gross Profit for the second quarter of 2010 totaled $7.5 million representing gross margins of 29.1%, rising 2.7% from $7.3 million in the second quarter of the previous year.

Operating income for the second quarter of 2010 totaled $3.7 million, representing operating margins of 14.6%, compared to $4.3 million in the second quarter of 2009.

Backlog of signed agreements, as of June 30, 2010, was at $166.9 million, including $41.1 million of revenues expected to be recognized in the remainder of 2010, compared to a backlog of $165.2 at the end of the previous quarter.  The weakness of the Euro versus the US Dollar resulted in a decrease of $5.2 million, which was offset by an increase of new contracts and an extension of existing contracts.  

Net income on a GAAP basis for the second quarter of 2010 was $2.5 million compared to $3.0 million in the second quarter of 2009.  Adjusted Net Income was $2.2 million for the quarter, compared to $4.1 million in the second quarter of 2009. Net income per diluted share on a GAAP basis for the quarter was $0.14, compared to $0.17 in the second quarter of 2009.  Adjusted net income per diluted share, totaled $0.12, compared to $0.24 in the second quarter of 2009.

Adjusted EBITDA for the second quarter of 2010 totaled $5.4 million, compared to $5.7 million in the second quarter of 2009.

Cash, cash equivalents and marketable securities as at June 30, 2010 was $40.8 million, compared with $40.1 million as at March 31, 2010.  The difference in the cash balance was mainly attributed to a positive operating cash flow of $4.5m and $3.7 million invested in capital expenditures.

Dividend Distribution: On August 4, 2010, the Company's Board of Directors declared a cash dividend in the amount of $0.15 per ordinary share, and in the aggregate amount of approximately $2.6 million. The dividend will be payable on September 1, 2010 to all of the Company's shareholders of record at the end of the trading day on the NASDAQ on August 16, 2010. 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, 2009.

Guidance for third quarter revenue is in the range of $25 - $26 million.  For 2010, guidance has been adjusted to reflect the weakness of the Euro and is in the range of $102 - $105 million.

David Rivel, CEO of RRsat, commented, "This quarter we reported solid results and profitability despite external factors such as weakness in the Euro. We also made some significant advances in our strategy to expand into key markets.  We recently signed a ten-year strategic alliance agreement with BT's media and broadcast division.  This exciting partnership will enable both companies to grow their global media business by leveraging RRsat's world-class content management and global distribution services with BT's Global brand and fiber optic network.  In addition, we have succeeded in further penetrating the US market by adding 13 US television channels for US-targeted broadcasting using our Galaxy 19 satellite platform.  Many of these channels were existing customers for their international broadcasting services that expanded their services with us.

Mr. Rivel added, "As we continue to pursue our strategy of becoming the largest distribution and play-out service for content providers, we intend to continue to demonstrate solid results while producing positive developments to achieve our goals."

Conference Call Information

Conference call scheduled later today, August 5, 2010 at 10:00 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.

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: 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:

1 888 295 2634 (US) and +972 3 925 5929 (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 550 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 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, 2009 and our Current Reports on Form 6-K.

SOURCE RRSat Global Communications Network Ltd

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