Attached files
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| 8-K - FORM 8-K - Cinedigm Corp. | form8k_1399666.htm |
FOR
IMMEDIATE RELEASE
Cinedigm
Digital Cinema Corp. Announces Fiscal Year 2010 Third Quarter
Results
-
Commitment for $100 Million Credit Facility Creates Platform For Growth: Phase 2
Gains Momentum
MORRISTOWN, N.J. – February 11, 2010
–Cinedigm Digital Cinema Corp. (“Cinedigm” or the “Company”) (NASDAQ:
CIDM) reported a 9.5% sequential quarterly increase in revenues to $21.8
million in its seasonally strong fiscal 2010 third quarter ending December 31,
2009. Revenues declined 4% versus the year-ago period. The Company
posted Adjusted EBITDA1 (defined below) of $11.0 million, sequentially
increasing 13.8% from $9.7 million in the second quarter. Adjusted
EBITDA in the quarter was flat versus the year-ago period Adjusted
EBITDA. The net loss in the third quarter of $6.4 million or $0.23
per share includes various non-cash items aggregating to $8.6 million or $0.30
per share, compared to similar items of $22.3 million or $0.81 per share in the
year-ago period. The Company ended the fiscal 2010 third quarter with
$12.1 million of unrestricted cash (excluding $16.4 million of restricted cash
and investments) on its balance sheet.
THIRD
QUARTER HIGHLIGHTS
|
·
|
Revenues
for the fiscal year 2010 third quarter were $21.8 million compared to
$22.7 million in the year-ago period. The decrease was primarily due
to the November 2008 originally contracted 16% step-down in Virtual Print
Fee (VPF) rates charged to the major movie studios via long term contracts
and lower advertising revenues. Partially offsetting these
declines were Phase 2-related digital cinema services fees and a 12%
increase in Content and Entertainment Segment revenues, which were driven
by content distribution fees.
|
|
·
|
Adjusted
EBITDA in the third quarter was $11.0 million, an even match to the
year-ago period. The flat Adjusted EBITDA as compared to the
previous year, despite a 4% decline in total revenues and a decline in
Phase 1 VPF revenues, is primarily the result of positive Adjusted EBITDA
from the Content and Entertainment Group and careful expense
management.
|
|
·
|
Signed
commitment letters for a $100 million non-recourse Phase 2 credit facility
with GE Capital and Société
Générale.
|
|
·
|
Signed
Virtual Print Fee agreements for Phase 2 with Warner Bros. and Overture
Films bringing the total to eight studios signed on to the Phase 2
plan.
|
|
·
|
Signed
first Exhibitor-Buyer Phase 2 Master License Agreement using National
Association of Theatre Owners (“NATO”) – Cinema Buying Group
contract.
|
Bud Mayo,
Chief Executive Officer of Cinedigm, stated, “The third quarter saw Cinedigm
take advantage of its strengthened balance sheet. At the end of October, we
signed commitment letters for a $100 million non-recourse Phase 2 credit
facility with GE Capital and Société Générale. The support of two key
Phase 1 lenders clearly shows that the credit market challenges for Cinedigm are
abating, and we are pushing ahead to create value for investors. As
we finalize consents and amendments to our Phase 2 studio contracts and as we
continue to sign Phase 2 exhibitor agreements, we are targeting a spring closing
of this facility. In
addition, the runaway success of Avatar has heightened excitement about 3-D
cinema and increased the already robust 3-D release pipeline. This
has further increased exhibitor demand for digital cinema as well as expanded
our alternative content pipeline. We look forward to capitalizing on
this enthusiasm in the months ahead.”
1 Adjusted EBITDA is defined by the
Company to be earnings before interest, taxes, depreciation and amortization,
other income (expense), net, stock-based compensation and non-recurring
items. Pursuant to the requirements of Regulation G, the Company has
provided a reconciliation in the tables attached to this release of Adjusted
EBITDA to U.S. GAAP net income (loss). The Company calculated and communicated
Adjusted EBITDA in the tables because the Company's management believes it is of
importance to investors and lenders by providing additional information with
respect to the performance of its fundamental business activities. The
Company's calculation of Adjusted EBITDA may or may not be consistent with the
calculation of this measure by other companies in the same industry. Investors
should not view Adjusted EBITDA as an alternative to the U.S. GAAP operating
measure of net income (loss). In addition, Adjusted EBITDA does not take into
account changes in certain assets and liabilities as well as interest and income
taxes that can affect cash flows. Management does not intend the
presentation of these non-GAAP measures to be considered in isolation or as a
substitute for results prepared in accordance with U.S. GAAP. These non-GAAP
measures should be read only in conjunction with the Company's consolidated
financial statements prepared in accordance with U.S.
GAAP.
(973)
290-0080 55 Madison Avenue,
Morristown, NJ 07960
PHASE
2 UPDATE
Mayo
added, "The completion of the NATO Cinema Buying Group Exhibitor-Buyer contract
was a hallmark event this quarter and the culmination of more than a year of
work. R/C Theatres, with its 68 screens, is the first CBG member to
use this contract and we have built a pipeline of 3,500 other screens interested
in Phase 2 participation. We also installed screens at our first exhibitor-buyer
customers in the quarter and have established a new financing approach for
exhibitors to own and deploy digital cinema equipment. Cinedigm
signed Phase 2 VPF agreements with Warner Bros. and Overture Films and now has
VPF agreements with 8 studios. To date we have installed 237 Phase 2
screens and almost 4,000 screens in total.”
CORPORATE
UPDATE
Mayo
concluded, “While significant work remains ahead, the third quarter was one of
great progress. In addition to the Phase 2 accomplishments, our
Entertainment Group distributed its second independent film, “OPA!”, and
launched its 3-D Concert Series with the Dave Matthews Band in 3-D which went to
520 theatres, a record for any alternative event we’ve
distributed. Finally, we are also growing our content delivery
business as we added several new trailer delivery customers and laid plans to
expand our satellite network with proceeds from our financing.”
CONFERENCE CALL
NOTIFICATION
Cinedigm
will host a conference call to discuss its financial results at 9:00 a.m.
Eastern on Thursday, February 11, 2010. The conference can be
accessed by dialing 877.754.5303 or 678.894.3030 at least five minutes before
the start of the call. No passcode is required. The conference call
will also be webcast simultaneously and will be accessible via the web on
Cinedigm’s Web site at http://investor.cinedigm.com/events.cfm. A
replay of the call will be available after 12:00 p.m. Eastern at 800.642.1687 or
706.645.9291, conference ID 3783693. The replay will be accessible
through Thursday, February 18th.
About
Cinedigm
Cinedigm
is the leader in providing the services, experience, technology and content
critical to transforming movie theaters into digital and networked entertainment
centers. The Company is a technology and services integrator that
works with Hollywood movie studios, independent movie distributors, and
exhibitors to bring movies in digital cinema format to audiences across the
country. Cinedigm’s digital cinema deployment organization, software,
unique combined satellite and hard drive digital movie delivery network;
pre-show in-theater advertising services; and distribution platform for
alternative content such as CineLive® 3-D and 2-D sports and concerts, thematic
programming and independent movies provide a complete suite of services required
to enable the digital theater conversion. CinedigmTM and
Cinedigm Digital Cinema Corp.TM are
trademarks of Cinedigm Digital Cinema Corp. www.cinedigm.com
[CIDM-E]
Safe
Harbor Statement
Investors
and readers are cautioned that certain statements contained in this document, as
well as some statements in periodic press releases and some oral statements of
Cinedigm officials during presentations about Cinedigm, along with Cinedigm 's
filings with the Securities and Exchange Commission, including Cinedigm's
registration statements, quarterly reports on Form 10-Q and annual report on
Form 10-K, are "forward-looking'' statements within the meaning of the Private
Securities Litigation Reform Act of 1995 (the
"Act''). Forward-looking statements include statements that are
predictive in nature, which depend upon or refer to future events or conditions,
which include words such as "expects',' "anticipates,'' "intends,'' "plans,''
“could,” “might,” "believes,'' “seeks,” "estimates'' or similar
expressions. In addition, any statements concerning future financial
performance (including future revenues, earnings or growth rates), ongoing
business strategies or prospects, and possible future actions, which may be
provided by Cinedigm’s management, are also forward-looking statements as
defined by the Act. Forward-looking statements are based on current
expectations and projections about future events and are subject to various
risks, uncertainties and assumptions about Cinedigm, its technology, economic
and market factors and the industries in which Cinedigm does business, among
other things. These statements are not guarantees of future
performance and Cinedigm undertakes no specific obligation or intention to
update these statements after the date of this release.
# #
#
Contact:
Adam M.
Mizel
Cinedigm
Digital Cinema Corp.
(973)
290.0080
amizel@cinedigm.com
CINEDIGM
DIGITAL CINEMA CORP.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(In
thousands, except for share and per share data)
(Unaudited)
|
Three
Months Ended
|
||||||||
|
December
31,
|
||||||||
|
2008
|
2009
|
|||||||
|
Revenues
|
$ | 22,710 | $ | 21,769 | ||||
|
Costs
and expenses:
|
||||||||
|
Direct
operating (exclusive of depreciation and amortization shown
below)
|
7,068 | 6,585 | ||||||
|
Selling,
general and administrative
|
4,691 | 4,158 | ||||||
|
Provision
for doubtful accounts
|
98 | 144 | ||||||
|
Research
and development
|
107 | 47 | ||||||
|
Stock-based
compensation
|
295 | 346 | ||||||
|
Impairment
of goodwill
|
6,525 | - | ||||||
|
Depreciation
and amortization of property and equipment
|
8,126 | 8,286 | ||||||
|
Amortization
of intangible assets
|
821 | 740 | ||||||
|
Total
operating expenses
|
27,731 | 20,306 | ||||||
|
Income
from operations
|
(5,021 | ) | 1,463 | |||||
|
Interest
income
|
88 | 101 | ||||||
|
Interest
expense
|
(6,935 | ) | (9,261 | ) | ||||
|
Other
expense, net
|
(162 | ) | (153 | ) | ||||
|
Change
in fair value of interest rate swap
|
(5,411 | ) | 853 | |||||
|
Change
in fair value of warrants
|
- | 613 | ||||||
|
Net
loss
|
(17,441 | ) | (6,384 | ) | ||||
|
Preferred
stock dividends
|
- | (100 | ) | |||||
|
Net
loss attributable to shareholders
|
$ | (17,441 | ) | $ | (6,484 | ) | ||
|
Net
loss per Class A and B common share - basic and diluted
|
$ | (0.63 | ) | $ | (0.23 | ) | ||
|
Weighted
average number of Class A and B common shares outstanding:
|
||||||||
|
Basic
and diluted
|
27,566,462 | 28,766,686 | ||||||
Cinedigm
Digital Cinema Corp.
Adjusted
EBITDA (as defined)
Reconciliation
to GAAP Net Income
(In
thousands)
(Unaudited)
|
Three
Months Ended
|
||||||||
|
December
31,
|
||||||||
|
2008
|
2009
|
|||||||
|
Net
loss
|
$ | (17,441 | ) | $ | (6,384 | ) | ||
|
Add
Back:
|
||||||||
|
Amortization
of software development
|
214 | 163 | ||||||
|
Depreciation
and amortization of property and equipment
|
8,126 | 8,286 | ||||||
|
Amortization
of intangible assets
|
821 | 740 | ||||||
|
Interest
income
|
(88 | ) | (101 | ) | ||||
|
Interest
expense
|
6,935 | 9,261 | ||||||
|
Other
expense, net
|
162 | 153 | ||||||
|
Impairment
of goodwill
|
6,525 | - | ||||||
|
Change
in fair value of interest rate swap
|
5,411 | (853 | ) | |||||
|
Change
in fair value of warrants
|
- | (613 | ) | |||||
|
Stock-based
expenses
|
37 | - | ||||||
|
Stock-based
compensation
|
295 | 346 | ||||||
|
Adjusted
EBITDA (as defined)
|
$ | 10,997 | $ | 10,998 | ||||
CINEDIGM
DIGITAL CINEMA CORP.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(In
thousands, except for share and per share data)
(Unaudited)
|
Nine
Months Ended
|
||||||||
|
December
31,
|
||||||||
|
2008
|
2009
|
|||||||
|
Revenues
|
$ | 65,129 | $ | 60,316 | ||||
|
Costs
and expenses:
|
||||||||
|
Direct
operating (exclusive of depreciation and amortization shown
below)
|
19,597 | 18,113 | ||||||
|
Selling,
general and administrative
|
13,711 | 12,100 | ||||||
|
Provision
for doubtful accounts
|
271 | 408 | ||||||
|
Research
and development
|
207 | 151 | ||||||
|
Stock-based
compensation
|
653 | 1,112 | ||||||
|
Impairment
of goodwill
|
6,525 | - | ||||||
|
Depreciation
and amortization of property and equipment
|
24,394 | 24,762 | ||||||
|
Amortization
of intangible assets
|
2,669 | 2,255 | ||||||
|
Total
operating expenses
|
68,027 | 58,901 | ||||||
|
Income
(loss) from operations
|
(2,898 | ) | 1,415 | |||||
|
Interest
income
|
311 | 236 | ||||||
|
Interest
expense
|
(21,101 | ) | (25,602 | ) | ||||
|
Other
expense, net
|
(488 | ) | (454 | ) | ||||
|
Gain
on extinguishment of debt
|
- | 10,744 | ||||||
|
Change
in fair value of interest rate swap
|
(3,846 | ) | 2,076 | |||||
|
Change
in fair value of warrants
|
- | (2,963 | ) | |||||
|
Net
loss
|
(28,022 | ) | (14,548 | ) | ||||
|
Preferred
stock dividends
|
- | (300 | ) | |||||
|
Net
loss attributable to shareholders
|
$ | (28,022 | ) | $ | (14,848 | ) | ||
|
Net
loss per Class A and B common share - basic and diluted
|
$ | (1.03 | ) | $ | (0.52 | ) | ||
|
Weighted
average number of Class A and B common shares outstanding:
|
||||||||
|
Basic
and diluted
|
27,324,324 | 28,572,727 | ||||||
Cinedigm
Digital Cinema Corp.
Adjusted
EBITDA (as defined)
Reconciliation
to GAAP Net Income
(In
thousands)
(Unaudited)
|
Nine
Months Ended
|
||||||||
|
December
31,
|
||||||||
|
2008
|
2009
|
|||||||
|
Net
loss
|
$ | (28,022 | ) | $ | (14,548 | ) | ||
|
Add Back:
|
||||||||
|
Amortization
of software development
|
601 | 486 | ||||||
|
Depreciation
and amortization of property and equipment
|
24,394 | 24,762 | ||||||
|
Amortization
of intangible assets
|
2,669 | 2,255 | ||||||
|
Interest
income
|
(311 | ) | (236 | ) | ||||
|
Interest
expense
|
21,101 | 25,602 | ||||||
|
Other
expense, net
|
488 | 454 | ||||||
|
Extinguishment
of debt
|
- | (10,744 | ) | |||||
|
Impairment
of goodwill
|
6,525 | - | ||||||
|
Change
in fair value of interest rate swap
|
3,846 | (2,076 | ) | |||||
|
Change
in fair value of warrants
|
- | 2,963 | ||||||
|
Stock-based
expenses
|
156 | - | ||||||
|
Stock-based
compensation
|
653 | 1,112 | ||||||
|
Adjusted
EBITDA (as defined)
|
$ | 32,100 | $ | 30,030 | ||||
CINEDIGM
DIGITAL CINEMA CORP.
CONSOLIDATED
BALANCE SHEETS
(In
thousands, except for share data)
(Unaudited)
|
March
31,
2009
|
December
31,
2009
|
|||||||
|
ASSETS
|
||||||||
|
Current
assets
|
||||||||
|
Cash
and cash equivalents
|
$ | 26,329 | $ | 12,118 | ||||
|
Restricted
available-for-sale investments
|
- | 5,764 | ||||||
|
Accounts
receivable, net
|
13,884 | 13,073 | ||||||
|
Deferred
costs
|
3,936 | 3,013 | ||||||
|
Unbilled
revenue, current portion
|
3,082 | 5,061 | ||||||
|
Prepaid
and other current assets
|
1,798 | 1,856 | ||||||
|
Notes
receivable, current portion
|
616 | 165 | ||||||
|
Total
current assets
|
49,645 | 41,050 | ||||||
|
Restricted
available-for-sale investments
|
- | 3,492 | ||||||
|
Restricted
cash
|
255 | 7,164 | ||||||
|
Security
deposits
|
424 | 427 | ||||||
|
Property
and equipment, net
|
243,124 | 228,037 | ||||||
|
Intangible
assets, net
|
10,707 | 8,452 | ||||||
|
Capitalized
software costs, net
|
3,653 | 3,803 | ||||||
|
Goodwill
|
8,024 | 8,024 | ||||||
|
Deferred
costs
|
3,967 | 7,295 | ||||||
|
Unbilled
revenue, net of current portion
|
1,253 | 966 | ||||||
|
Notes
receivable, net of current portion
|
959 | 843 | ||||||
|
Accounts
receivable, net of current portion
|
386 | 386 | ||||||
|
Total
assets
|
$ | 322,397 | $ | 309,939 | ||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current
liabilities
|
||||||||
|
Accounts
payable and accrued expenses
|
$ | 14,954 | $ | 7,333 | ||||
|
Current
portion of notes payable, non-recourse
|
24,824 | 25,791 | ||||||
|
Current
portion of notes payable
|
424 | 181 | ||||||
|
Current
portion of deferred revenue
|
5,535 | 4,916 | ||||||
|
Current
portion of customer security deposits
|
314 | 104 | ||||||
|
Current
portion of capital leases
|
175 | 499 | ||||||
|
Total
current liabilities
|
46,226 | 38,824 | ||||||
|
Notes
payable, non-recourse, net of current portion
|
170,624 | 153,637 | ||||||
|
Notes
payable, net of current portion
|
55,333 | 67,633 | ||||||
|
Capital
leases, net of current portion
|
5,832 | 5,721 | ||||||
|
Warrant
liability
|
- | 13,695 | ||||||
|
Fair
value of interest rate swap
|
4,529 | 2,453 | ||||||
|
Deferred
revenue, net of current portion
|
1,057 | 1,976 | ||||||
|
Customer
security deposits, net of current portion
|
9 | 9 | ||||||
|
Total
liabilities
|
283,610 | 283,948 | ||||||
|
Commitments
and contingencies
|
||||||||
|
Stockholders'
equity:
|
||||||||
|
Preferred
stock, $0.001 par value per share; 15,000,000 shares authorized;
Series
A 10%-20 shares authorized; 8 shares issued and outstanding, at March
31, 2009 and December 31, 2009, respectively. Liquidation preference
$4,050
|
3,476 | 3,556 | ||||||
|
Class
A common stock, $0.001 par value per share; 65,000,000 and 75,000,000
shares authorized at March 31, 2009 and December 31, 2009, respectively;
27,544,315 and 28,084,315
shares issued and 27,492,875 and 28,032,875
shares outstanding at March 31, 2009 and December 31, 2009,
respectively
|
27 | 28 | ||||||
|
Class
B common stock, $0.001 par value per share; 15,000,000 shares authorized;
733,811 shares issued and outstanding at March 31, 2009 and December 31,
2009, respectively
|
1 | 1 | ||||||
|
Additional
paid-in capital
|
173,565 | 175,596 | ||||||
|
Treasury
Stock, at cost; 51,440 Class A shares
|
(172 | ) | (172 | ) | ||||
|
Accumulated
deficit
|
(138,110 | ) | (152,958 | ) | ||||
|
Accumulated
other comprehensive loss
|
- | (60 | ) | |||||
|
Total
stockholders' equity
|
38,787 | 25,991 | ||||||
| $ | 322,397 | $ | 309,939 | |||||