EX-99 2 exhibit_99-1.htm EXHIBIT 99.1 exhibit_99-1.htm


Exhibit 99.1
 
 
RRSat Global Communications
Network Ltd. and its
Subsidiaries
 
Interim Condensed
Consolidated Financial
Statements
As at June 30, 2013
(Unaudited)

 
 

 
 
Index to the Interim Consolidated Financial Statements as of June 30, 2013 (unaudited)

 
Contents
 
Page

 
 
F - 2

 
 
The Board of Directors
RRSat Global Communications Network Ltd.

Dear Sirs,

Review of the unaudited interim consolidated as of June 30, 2013 and financial statements for the six-month and three-month periods then ended June 30, 2013

Introduction

We have reviewed the accompanying financial information of RRsat Global Communications Network Ltd and its subsidiaries (“the Group”) comprising of the condensed consolidated interim balance sheet as of June 30, 2013 and the related statements of operations, changes in shareholder's equity and comprehensive income and cash flows for the  six-month and three-month periods then ended. The Board of Directors and Management are responsible for the preparation and fair presentation of this interim financial information in accordance with generally accepted accounting principles in the United States. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of review

We conducted our review in accordance with Standard on Review Engagements 1, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity of Certified Public Accountants in Israel." A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards in Israel and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review nothing has come to our attention that causes us to believe that the accompanying interim financial information was not prepared, in all material respects, in accordance with generally accepted accounting principles in the United States.

Sincerely yours,

Somekh Chaikin
Certified Public Accountants (Isr.)
Member Firm of KPMG International
Tel-Aviv, Israel
August 7, 2013
 
 
F - 3

 
 
RRSat Global Communications Network Ltd and its subsidiaries

Interim Condensed Consolidated Balance Sheets


In thousands, except share data

   
June 30
   
December 31
 
   
2013
   
2012
 
   
(unaudited)
   
(audited)
 
Current assets
           
Cash and cash equivalents
    17,003       12,133  
Marketable securities and short term investments
    10,773       14,224  
Accounts receivable:
               
Trade,(net of provision for doubtful accounts of $8,654 and $7,580 as of June 30, 2013 and December 31, 2012, respectively)
        21,214           20,898  
Other
    1,479       1,054  
Deferred taxes
    2,482       2,146  
Prepaid expenses
    2,614       2,445  
                 
Total current assets
    55,565       52,900  
                 
Long-term prepaid expenses
    3,052       2,924  
Long-term land lease prepaid expenses
    7,518       7,563  
                 
Assets held for employee severance payments
    2,002       1,845  
                 
Fixed assets, net
    45,178       42,671  
Goodwill
    4,892       4,892  
                 
Intangible assets, at cost, less accumulated amortization
    360       472  
                 
Total assets
  $ 118,567     $ 113,267  
 
     
Avi Cohen
 
Shmuel Koren
CEO
 
CFO
 
August 7, 2013
   
 
The accompanying notes are an integral part of the interim financial statements.
 
 
F - 4

 
 
RRSat Global Communications Network Ltd. and its subsidiaries

Interim Condensed Consolidated Balance Sheets (cont’d)

   
June 30
   
December 31
 
   
2013
   
2012
 
   
(unaudited)
   
(audited)
 
Liabilities and shareholders’ equity
           
             
Current liabilities
           
Account payable:
           
 Trade
  $ 12,756     $ 9,816  
 Other
    4,581       5,322  
Deferred income
    9,990       9,398  
                 
Total current liabilities
    27,327       24,536  
                 
Long-term liabilities
               
Deferred income
    7,416       6,257  
Liability in respect of employee severance payments and others
    2,414       2,323  
Deferred taxes
    2,583       2,200  
                 
Total long-term liabilities
    12,413       10,780  
                 
Total liabilities
    39,740       35,316  
                 
Shareholders’ equity
               
Share capital
               
Ordinary share NIS 0.01 par value each (20,000,000
               
 authorized as of June 30, 2013 and December 31,
               
 2012, 17,346,561 shares issued and fully paid as of
               
 June 30, 2013 and December 31, 2012)
    40       40  
Additional paid in capital
    53,592       53,312  
Retained earnings
    24,760       24,231  
Accumulated other comprehensive gain
    435       368  
                 
Total shareholders’ equity
  $ 78,827     $ 77,951  
                 
Total liabilities and shareholders’ equity
  $ 118,567     $ 113,267  

 
F - 5

 

RRSat Global Communications Network Ltd. and its subsidiaries

Interim Condensed Consolidated Statements of Operations

In thousands, except share data

   
Six months ended
   
Three months ended
   
Year ended
 
   
June 30
   
June 30
   
June 30
   
June 30
   
December 31
 
   
2013
   
2012
   
2013
   
2012
   
2012
 
   
(unaudited)
   
(unaudited)
   
(unaudited)
   
(unaudited)
   
(audited)
 
Revenues
  $ 58,743     $ 55,527     $ 29,486     $ 28,068     $ 113,400  
                                         
Cost of revenues
    44,329       42,726       22,136       21,401       86,253  
                                         
Gross profit
    14,414       12,801       7,350       6,667       27,147  
                                         
Operating expenses
                                       
                                         
Sales and marketing
    4,530       3,347       2,276       1,736       7,388  
                                         
General and administrative
    5,199       5,025       2,694       2,455       10,106  
                                         
Total operating expenses
    9,729       8,372       4,970       4,191       17,494  
                                         
Operating income
    4,685       4,429       2,380       2,476       9,653  
                                         
 Financial income (expenses), net
    (269     380       3       (561     1,521  
                                         
Income before taxes on
                                       
 income
    4,416       4,809       2,383       1,915       11,174  
                                         
Income taxes
    1,112       1,391       649       775       2,884  
                                         
Net income
  $ 3,304     $ 3,418     $ 1,734     $ 1,140     $ 8,290  
                                         
Income per ordinary share
                                       
                                         
Basic and diluted income per ordinary share
    0.19       0.20       0.10       0.07       0.48  
                                         
Weighted average number
                                       
 of ordinary share used to
                                       
 compute basic income per
                                       
 ordinary share
    17,346,561       17,346,561       17,346,561       17,346,561       17,346,561  
                                         
Weighted average number
                                       
 of Ordinary share used to
                                       
 compute diluted income
                                       
 per ordinary share
    17,617,091       17,346,561       17,637,393       17,346,561       17,346,561  
 
 
F - 6

 
 
RRSat Global Communications Network Ltd. and its subsidiaries

Interim Condensed Consolidated Statements of Comprehensive Income

In thousands, except share data

   
Six months ended
   
Three months ended
   
Year ended
 
   
June 30,
2013
   
June 30,
2012
   
June 30,
2013
   
June 30,
2012
   
December 31,
2012
 
   
(unaudited)
   
(unaudited)
   
(unaudited)
   
(unaudited)
   
(audited)
 
Net income
    3,304       3,418       1,734       1,140       8,290  
                                         
Other comprehensive income, net of tax:
                                       
                                         
Unrealized change in investment securities,
                                       
 net of tax effect $22
    (68 )     180       (75 )     13       150  
Reclassification adjustments for losses (profit)
                                       
 of investment securities, net of tax effect of
                                       
 $17
    (51 )     -       (18 )     (2 )     69  
                                         
Cash flow hedging derivatives, net of tax
                             
 effect of $153
    459       -       223       -       259  
Reclassification adjustments for Loss (income)
                                       
of hedging derivatives, net of tax effect of $91
    *(273 )     -       *(191 )     -       (40 )
                                         
Total other comprehensive income net of tax
    67       180       (61 )     11       438  
                                         
Total comprehensive income
    3,371       3,598       1,673       1,151       8,728  
 
*  Reclassified mainly into cost of revenue
 
 
F - 7

 
 
RRSat Global Communications Network Ltd. and its subsidiaries

Interim Condensed Consolidated Statements of Changes in Shareholder’s Equity and Comprehensive Income

In thousands, except share data

   
Ordinary shares
               
Accumulated
       
               
Additional
         
other
       
   
Number of
         
paid-in
   
Retained
   
comprehensive
       
   
shares
   
Amount
   
capital
   
earnings
   
(loss) income
   
Total
 
Six months ended
                                   
June  30, 2013 (unaudited)
                                   
Balance as at January 1,
                                   
 2013 
    17,346,561       40       53,312       24,231       368       77,951  
Stock-based compensation
    -       -       280       -               280  
Dividend paid $0.16
                                               
 per share
    -       -               (2,775 )             (2,775 )
Net income
    -       -               3,304               3,304  
Other comprehensive income
    -       -                       67       67  
                                                 
Balance as at June 30, 2013
                                               
 (unaudited)
    17,346,561       40       53,592       24,760       435       78,827  
                                                 
Six months ended June30,
                                               
 2012 (unaudited)
                                               
                                                 
Balance as at January 1, 2012
    17,346,561       40       53,010       31,727       (70 )     84,707  
Stock-based compensation
    -       -       88       -               88  
Dividend paid $0.23 per
                                               
 share
    -       -               (3,990 )             (3,990 )
Net income
    -       -               3,418               3,418  
Other comprehensive income
    -       -                       180       180  
                                                 
Balance as at June 30, 2012
                                               
 (unaudited)
    17,346,561       40       53,098       31,155       110       84,403  
 
The accompanying notes are an integral part of the interim consolidated financial statements.
 
 
F - 8

 
 
RRSat Global Communications Network Ltd. and its subsidiaries

Interim Condensed Consolidated Statements of Changes in Shareholder’s Equity and Comprehensive Income (cont’d)

In thousands, except share data

   
Ordinary shares
               
Accumulated
       
               
Additional
         
other
       
   
Number of
         
paid-in
   
Retained
   
comprehensive
       
   
shares
   
Amount
   
capital
   
earnings
   
(loss) income
   
Total
 
Three months ended
June 30, 2013 (unaudited)
                                   
                                     
Balance as at April 1, 2013
    17,346,561       40       53,449       25,801       496       79,786  
Stock-based compensation
    -       -       143       -               143  
Dividend paid $0.16
                                               
 per share
    -       -               (2,775 )             (2,775 )
Net income
    -       -               1,734               1,734  
Other comprehensive income
    -       -                       (61 )     (61 )
                                                 
Balance as at June 30, 2013
                                               
 (unaudited)
    17,346,561       40       53,592       24,760       435       78,827  
                                                 
Three months ended
June  30, 2012 (unaudited) 
                                               
                                                 
Balance as at April 1, 2012
    17,346,561       40       53,053       30,015       99       83,207  
Stock-based compensation
    -       -       45       -               45  
Net income
    -       -               1,140               1,140  
Other comprehensive income
    -       -                       11       11  
                                                 
Balance as at June 30, 2012
                                               
 (unaudited)
    17,346,561       40       53,098       31,155       110       84,403  
 
The accompanying notes are an integral part of the interim consolidated financial statements.
 
 
F - 9

 
 
RRSat Global Communications Network Ltd. and its subsidiaries

Interim Condensed Consolidated Statements of Changes in Shareholder’s Equity and Comprehensive Income (cont’d)

In thousands, except share data

   
Ordinary shares
               
Accumulated
       
               
Additional
         
other
       
   
Number of
         
paid-in
   
Retained
   
comprehensive
       
   
shares
   
Amount
   
capital
   
earnings
   
(loss) income
   
Total
 
                                     
Balance as of
                                   
 January 1, 2012 (audited)
    17,346,561       40       53,010       31,727       (70 )     84,707  
                                                 
Stock-based compensation
    -       -       302       -               302  
Dividend paid $0.23 per
                                               
 share
    -       -               (15,786 )             (15,786 )
Net income
    -       -               8,290               8,290  
Other comprehensive income
    -       -                       438       438  
                                                 
Balance as of December 31,
                                               
 2012 (audited)
    17,346,561       40       53,312       24,231       368       77,951  
 
The accompanying notes are an integral part of the interim consolidated financial statements.
 
 
F - 10

 
 
RRSat Global Communications Network Ltd. and its subsidiaries

Interim Condensed Consolidated Statements of Cash Flows

In thousands, except share data

               
Year ended
 
   
Six months ended June 30
   
Three months ended June 30
   
December 31
 
   
2013
   
2012
   
2013
   
2012
   
2012
 
   
(unaudited)
   
(unaudited)
   
(unaudited)
   
(unaudited)
   
(audited)
 
Cash flows from operating activities
                             
Net income
  $ 3,304     $ 3,418     $ 1,734     $ 1,140     $ 8,290  
Adjustments required to reconcile net income to net cash provided by operating activities
                                       
                                         
Depreciation and amortization
    4,294       4,436       2,142       2,231       8,883  
Non cash stock-based compensation
                                       
 expenses
    280       88       143       45       302  
Provision for doubtful account
    1,074       1,545       554       721       2,895  
Deferred taxes
    25       144       74       (22 )     692  
Discount accretion and premium
                                       
 amortization of available-for-sale
                                       
 securities, net
    (136 )     (223 )     (66 )     (107 )     (587 )
Income (loss) on sales of available for
                                       
 sale securities
    (51 )     -       (18 )     (3 )     92  
Changes in liability for employee
                                       
 severance payments, net
    (25 )     72       23       57       111  
Changes in fair value of derivatives
    108       (312 )     (27 )     315       (1,182 )
Profit (loss) from trading securities, net
    1       (55 )     11       (9 )     (58 )
                                         
Changes in assets and liabilities:
                                       
                                         
Decrease (increase) in account receivable
                                       
- trade
    (1,391 )     (951 )     (799 )     726       (4,391 )
Decrease (increase) in account receivable
                                       
- other
    (419 )     52       (100 )     567       177  
Decrease (increase) in prepaid expenses
    (169 )     (688 )     574       (536 )     (222 )
Decrease (increase) in long-term prepaid
                                       
 expenses
    (101 )     188       45       235       (441 )
Increase (decrease) in account payables
    2,197       (337 )     2,303       (775 )     1,655  
Increase (decrease) in deferred income
    1,751       288       1,794       (13 )     (324 )
                                         
Net cash provided by operating activities
    10,742       7,665       8,387       4,572       15,892  
 
The accompanying notes are an integral part of the interim consolidated financial statements.
 
 
F - 11

 
 
RRSat Global Communications Network Ltd. and its subsidiaries

Interim Condensed Consolidated Statements of Cash Flows (cont’d)

In thousands, except share data

               
Year ended
 
   
Six months ended June 30
   
Three months ended
   
December 31
 
   
2013
   
2012
   
2013
   
2012
   
2012
 
   
(unaudited)
   
(unaudited)
   
(unaudited)
   
(unaudited)
   
(audited)
 
Cash flows from investing activities
                             
Investment in fixed assets
    (6,576 )     (3,177 )     (5,004 )     (870 )     (6,575 )
Business combination
    -       -       -       -       (1,218 )
Investment in long term prepaid
                                       
expenses
    -       (14 )     -       (1 )     (17 )
Decrease (increase) in short-term
                                       
 investments, net
    1,339       -       -       -       (1,339 )
Investments in securities available –for
                                       
 -sale
    (2,257 )     (3,308 )     (1,043 )     (531 )     (4,946 )
Decrease in trading securities,
                                       
 net
    -       1,512       -       -       1,512  
Proceeds from sale of fixed assets
    -       8       -       -       8  
Proceeds from securities available- for -sale
    4,397       4,713       2,877       1,590       10,159  
Net cash from (used in) investing
                                       
 activities
    (3,097 )     (266 )     (3,170 )     188       (2,416 )
                                         
Cash flows from financing activities
                                       
Dividend paid
    (2,775 )     (3,990 )     (2,775 )     (3,990 )     (15,786 )
Net cash used in financing activities
    (2,775 )     (3,990 )     (2,775 )     (3,990 )     (15,786 )
Increase (decrease) in cash and cash
                                       
 equivalents
    4,870       3,409       2,442       770       (2,310 )
Balance of cash and cash equivalents
                                       
 at beginning of period
    12,133       14,443       14,561       17,082       14,443  
Balance of cash and cash equivalents
                                       
 at end of period
    17,003       17,852       17,003       17,852       12,133  
                                         
A   Non-cash transactions
                                       
                                         
Investment in fixed assets
    107       818       107       818       37  
                                         
B .  Supplementary cash flow information
                                       
                                         
Income taxes paid (refunded), net
    847       (141 )     362       (751 )     1,218  
                                         
C.  Business combination
 
   
Year ended
 
   
December 31,
 
   
2012
 
         
Fixed assets
    411  
Other accounts payable
    (479 )
Customer relationship
    127  
Goodwill
    1,159  
         
Net cash paid
    1,218  

The accompanying notes are an integral part of the interim consolidated financial statements.
 
 
F - 12

 
 
RRSat Global Communications Network Ltd. and its subsidiaries

Notes to the Condensed Consolidated Financial Statements (unaudited)

In thousands

Note 1 - Organization and Basis of Presentation

A.           Description of business

RRSat Global Communications Network Ltd. was incorporated in 1981 and it engages in providing global, end-to-end, content distribution and management services to television and radio broadcasting industries through satellite, terrestrial fiber optic and Internet, and mobile communications services through satellites (MSS).

B.           Basis of presentation and adoption of new account standards

The interim consolidated financial statements as of June 30, 2013, and for the six-month and three-month period then ended were prepared in accordance with Generally Accepted Accounting Principles in the United States (U.S. GAAP). These financial statements were prepared in a condensed format and should be read in conjunction with the Company’s audited financial statements and accompanying notes as at December 31, 2012 (“the annual financial statements”). Results for the interim period presented are not necessarily indicative of the results to be expected for the full year.

C.           Recently issued accounting standards

In December 2011, the FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about offsetting Assets and Liabilities. ASU 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on its financial position, and to allow investors to better compare financial statements prepared under U.S. GAAP with financial statements prepared under International Financial Reporting Standards (IFRS). The new standards are effective for annual periods beginning January 1, 2013, and interim periods within those annual periods. Retrospective application is required. The company implement the provisions of ASU 2011-11 as of January 1, 2013.

D.           Recent accounting pronouncements

In February 2013, the FASB released Accounting Standards Update 2013-02, Comprehensive Income – Reporting of Amounts Reclassified Out of accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-02 requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. ASU 2013-02 does not change the current requirements for reporting net income or other comprehensive income in financial statements. The Company will be required to apply ASU 2013-02 for reporting periods  beginning on January 1, 2013.

E.           Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets: impairment of reporting units containing goodwill, allocation of fair value of assets and liabilities in acquisitions, allowances for doubtful accounts, the valuation of derivatives, impairment of fixed and intangible assets, valuation of deferred tax assets, share-based compensation, income tax, uncertainties and other contingencies. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions.
 
 
F - 13

 
 
RRSat Global Communications Network Ltd. and its subsidiaries

Notes to the Condensed Consolidated Financial Statements (unaudited)

In thousands

Note 2 – Segments Results

The Company’s segments are strategic business units that offer different communication services and are managed accordingly.
The Company analyzes its operating segments based on the segment’s gross profit. The Company has two reportable segments: (1) Content management and distribution services to television and radio broadcasting industries (hereinafter – content management and distribution services), and (2) Mobile satellite communications services.

Management evaluates each segment’s performance based upon revenues and gross profit. Management believes such discussions are the most informative representation of how management evaluates performance. Business segments revenues and gross profit are presented below.

The following Tables show components of results of operations by segment:

Six months ended June 30, 2013 (unaudited)

   
 
Mobile Satellite Services
   
Content management and distribution services
   
 
Total
 
Revenues
  $ 5,280     $ 53,463     $ 58,743  
                         
Gross profit
  $ 1,146     $ 13,268     $ 14,414  
                         
Sales and marketing
                  $ 4,530  
General and administration
                  $ 5,199  
                         
Operating income
                  $ 4,685  
                         
Financial expenses net
                  $ (269 )
                         
Income before taxes on income
                  $ 4,416  
                         
Depreciation and amortization
  $ 160     $ 4,134     $ 4,294  

 
F - 14

 

RRSat Global Communications Network Ltd. and its subsidiaries

Notes to the Condensed Consolidated Financial Statements (unaudited)

In thousands
 
Note 2 – Segments Results (cont’d)
 
Six month ended June 30, 2012 (unaudited):
 
   
 
Mobile Satellite Services
   
Content management and distribution services
   
 
Total
 
Revenues
  $ 4,129     $ 51,398     $ 55,527  
                         
Gross profit
  $ 512     $ 12,289     $ 12,801  
                    $ 3,347  
Sales and marketing
                  $ 5,025  
General and administration
                       
                         
Operating income
                  $ 4,429  
                         
Financial income net
                  $ 380  
                         
Income before taxes on income
                  $ 4,809  
                         
Depreciation and amortization
  $ 168     $ 4,268     $ 4,436  
 
 
F - 15

 
 
 
RRSat Global Communications Network Ltd. and its subsidiaries

Notes to the Condensed Consolidated Financial Statements (unaudited)

In thousands
 
Note 2 – Segments Results (cont’d)

Three months ended June 30, 2013 (unaudited)

   
Mobile Satellite Services
   
Content management and distribution services
   
 
Total
 
Revenues
  $ 2,587     $ 26,899     $ 29,486  
                         
Gross profit
  $ 564     $ 6,786     $ 7,350  
                         
Sales and marketing
                  $ 2,276  
General and administration
                  $ 2,694  
                         
Operating income
                  $ 2,380  
                         
Financial income net
                  $ 3  
                         
Income before taxes on income
                  $ 2,383  
                         
Depreciation and amortization
  $ 80     $ 2,062     $ 2,142  

Three month ended June 30, 2012 (unaudited):

   
Mobile Satellite Services
   
Content management and distribution services
   
 
Total
 
Revenues
  $ 2,155     $ 25,913     $ 28,068  
                         
Gross profit
  $ 270     $ 6,397     $ 6,667  
                    $ 1,736  
Sales and marketing
                  $ 2,455  
General and administration
                       
                         
Operating income
                  $ 2,476  
                         
Financial income net