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Cinedigm Digital Cinema Corp. (CIDM)
-- Consolidated revenues up 15.9% year-over-year to $20.9 million
-- Successful integration and early outperformance of the New Video
acquisition
Cinedigm Digital Cinema Corp. (CIDM), the global leader in the
digital cinema industry, today announced financial results for the
first quarter fiscal 2013 ended June 30, 2012.
Revenues for the first quarter of fiscal 2013 were $20.9 million, a
15.9% increase from $18.0 million in the first quarter a year ago.
The increase in revenues was primarily the result of the New Video
acquisition, with non-deployment revenues almost doubling
year-over-year to $6.9 million from $3.5 million, as well as growth
in the digital cinema software and servicing units. This increase was
partially offset by an expected year-over-year decline in the
Company’s deployment business virtual print fee revenues due to
shifting movie release timing. Pro forma non-deployment revenues,
including New Video in both periods and intersegment deployment
service fees, increased by 5.6% year-over-year.
In the first quarter of fiscal 2013, Adjusted EBITDA (1) from
continuing operations totaled $13.5 million, consistent with $13.6
million in the year-ago period. Excluding the Company’s deployment
business, Adjusted EBITDA from continuing operations was $0.8
million, unchanged from the same period a year ago. Increased
performance of the digital cinema service unit was partially offset
by timing delays in new software sales, software revenue recognition
and shifting movie release timing in our content unit. As a result of
the New Video acquisition, this was also the first quarter in which
acquisition and marketing costs associated with movie releases were
recorded in advance of recognizing the corresponding distribution
revenues expected in subsequent quarters. The total Adjusted EBITDA
impact from release expenses in the quarter was approximately ($0.3)
million.
Net loss from continuing operations in the first quarter of fiscal
2013 was $4.9 million, or $0.11 per share. The first quarter 2013 was
impacted by transaction and transition costs associated with the New
Video acquisition, including approximately $1.3 million in one-time
M&A expenses. Excluding the M&A expenses, net loss from continuing
operations in the first quarter of fiscal 2013 was $3.6 million, or
$0.08 per share. This compares to a net loss from continuing
operations of $4.0 million, or $0.12 per share in the comparable
prior year period.
During the quarter, the Company released the high profile
documentary, The Invisible War, to glowing reviews and significant
awareness from the mainstream media to the floors of Congress. The
Company also released the mixed martial arts documentary, Like Water,
based on the life of UFC champion Anderson Silva. Based on pre-sales
of ancillary distribution rights and early release results, the
Company expects both releases to be profitable.
"As we have discussed in the past, fiscal year 2013 will be a year of
both investment and growth, which was demonstrated in our fiscal
first quarter," said Chris McGurk, Cinedigm’s Chairman and Chief
Executive Officer. "We are extremely pleased with the integration and
performance of New Video and believe this strategic and accretive
acquisition positions Cinedigm well to deliver growth in the content
distribution business. As always, we remain focused on profitably
growing the entire business and making additional strategic
investments to drive shareholder returns in fiscal year 2013 and
beyond."
"We are pleased with our solid double-digit consolidated revenue
growth this quarter and we are excited by the very rapid growth in
our high margin digital home entertainment distribution revenues,"
said Adam Mizel, the Company’s Chief Operating Officer and CFO. "We
continue to complete Phase 2 deployments as we installed 644 systems
in the quarter. As of June 30 we had 660 screens in our backlog to be
installed and a busy new sales pipeline. We are optimistic the
installation deadline will be extended to the end of the calendar
year. Although the quarterly timing of software deployments and
revenue recognition are somewhat unpredictable, we completed one of
our three externally delayed software projects this quarter and our
sales pipeline remains robust. Our solid operational performance has
enabled us to continue to strengthen our balance sheet by improving
our liquidity and reducing our non-recourse debt by in excess of
$14.0 million during the quarter."
Fiscal 2013 Outlook
The Company is reaffirming its fiscal 2013
guidance and expects consolidated GAAP revenues including its
deployment units of $91-$97 million, and consolidated Adjusted EBITDA
of $57-$59 million in Fiscal 2013.
The Company is also reaffirming that it expects Fiscal 2013 Adjusted
EBITDA from non-deployment operations of $11.2-$12.7 million, prior
to the $4.5-$5.0 million of GAAP expense impact from 8-10 movie
acquisitions and additional library acquisitions. Net of the GAAP
expense impact, the Company expects to produce reported Adjusted
EBITDA from non-deployment operations for Fiscal 2013 of $6.7-$7.7
million. The Company expects its portfolio of movie distribution
rights to produce a strong and accretive return on investment (ROI).
(1) Adjusted EBITDA is defined by the Company for the periods
presented to be earnings before interest, taxes, depreciation and
amortization, other income, net, stock-based expenses and
compensation, merger and acquisition costs, and certain other 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.
Conference Call
Cinedigm will host a conference call to discuss its
financial results at 4:30 p.m. EDT on August 14, 2012. The conference
call can be accessed by dialing (877) 754-5303 or for international
callers by dialing (678) 894-3030 at least five minutes prior to the
start of the call. No passcode is required. The earnings call and
accompanying slides will also be broadcast live over the Internet and
can be accessed on the Investor Relations section of the Company’s
Web site at http://investor.cinedigm.com/events.cfm. To listen to the
live webcast, please visit the site prior to the start of the call in
order to register, download and install any necessary audio software.
For those unable to participate during the live broadcast, a replay
will be available beginning August 14, 2012 at 5:30 p.m. EDT, through
August 21, 2012 at 11:59 p.m. EDT. To access the replay, dial (800)
585-8367 (U.S.) or (404) 537-3406 (International) and use passcode:
15481861.
About Cinedigm
Cinedigm Digital Cinema Corp. is a leader in
providing the services, experience, technology and content critical
to transforming movie theaters into digital and networked
entertainment centers. The Company partners 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, state of the art
distributor and exhibition software, and marketing and distribution
platform for alternative content and independent films are a
cornerstone of the digital cinema transformation. With the April
acquisition of New Video, the world’s largest aggregator of
independent digital content and leading distributor of quality
entertainment, CIDM has created a new full service end-to-end digital
studio, enabling the Company to acquire and distribute independent
films and specialty content both theatrically and via digital, mobile
and home media platforms. Cinedigm(TM) 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.
CINEDIGM DIGITAL CINEMA CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
June 30, March 31,
2012 2012
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ASSETS (Unaudited)
Current assets
Cash and cash equivalents $ 19,512 $ 17,843
Restricted available-for-sale investments -- 9,477
Accounts receivable, net 31,905 24,502
Deferred costs, current portion 2,199 2,228
Unbilled revenue, current portion 8,865 7,510
Prepaid and other current assets 4,041 1,121
Note receivable, current portion 658 498
Assets held for sale -- 214
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Total current assets 67,180 63,393
Restricted cash 5,751 5,751
Security deposits 241 207
Property and equipment, net 194,203 200,974
Intangible assets, net 15,381 466
Capitalized software costs, net 5,682 5,156
Goodwill 7,101 5,765
Deferred costs, net of current portion 4,567 5,080
Unbilled revenue, net of current portion 574 617
Accounts receivable, long-term 943 773
Note receivable, net of current portion 486 465
Investment in non-consolidated entity, net 1,521 1,490
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Total assets $ 303,630 $ 290,137
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CINEDIGM DIGITAL CINEMA CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
(continued)
June 30, March 31,
2012 2012
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LIABILITIES AND STOCKHOLDERS’ DEFICIT (Unaudited)
Current liabilities
Accounts payable and accrued expenses $ 33,475 $ 20,854
Current portion of notes payable, non-recourse 32,180 35,644
Current portion of capital leases 199 186
Current portion of deferred revenue 3,184 3,677
Current portion of contingent consideration for
business combination 750 --
Liabilities as part of assets held for sale -- 75
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Total current liabilities 69,788 60,436
Notes payable, non-recourse, net of current
portion 125,085 135,345
Notes payable 89,739 87,354
Capital leases, net of current portion 5,187 5,244
Interest rate swaps 1,354 1,771
Deferred revenue, net of current portion 11,517 11,451
Contingent consideration, net of current portion 3,094 --
Customer security deposits, net of current
portion -- 9
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Total liabilities 305,764 301,610
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Commitments and contingencies
Stockholders’ Deficit
Preferred stock, 15,000,000 shares authorized;
Series A 10% - $0.001 par value per share; 20
shares authorized; 7 shares issued and outstanding
at June 30, 2012 and March 31, 2012, respectively.
Liquidation preference of $3,698 3,385 3,357
Class A common stock, $0.001 par value per share;
75,000,000 shares authorized; 48,393,820 and
37,722,927 shares issued and 48,342,380 and
37,671,487 shares outstanding at June 30, 2012 and
March 31, 2012, respectively 48 38
Class B common stock, $0.001 par value per share;
15,000,000 shares authorized; 0 and 25,000 shares
issued and outstanding, at June 30, 2012 and March
31, 2012, respectively -- --
Additional paid-in capital 220,890 206,348
Treasury stock, at cost; 51,440 Class A shares (172) (172)
Accumulated deficit (226,285) (221,044)
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Total stockholders’ deficit (2,134) (11,473)
----------- -----------
Total liabilities and stockholders’ deficit $ 303,630 $ 290,137
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CINEDIGM DIGITAL CINEMA CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for share and per share data)
(Unaudited)
For the Three Months
Ended June 30,
-------------------------
2012 2011
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Revenues $ 20,904 $ 18,041
Costs and expenses:
Direct operating (exclusive of depreciation and
amortization shown below) 2,435 1,593
Selling, general and administrative 5,893 3,410
Provision for doubtful accounts 76 --
Research and development 38 55
Merger and acquisition expenses 1,267 --
Depreciation and amortization of property and
equipment 9,097 8,854
Amortization of intangible assets 158 92
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Total operating expenses 18,964 14,004
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Income from operations 1,940 4,037
Interest income 19 51
Interest expense (7,477) (7,371)
Income on investment in non-consolidated entity 31 --
Other income, net 198 46
Change in fair value of interest rate swap 421 (787)
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Net loss from continuing operations (4,868) (4,024)
Loss from discontinued operations (284) (2,369)
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Net loss (5,152) (6,393)
Preferred stock dividends (89) (89)
----------- -----------
Net loss attributable to common stockholders $ (5,241) $ (6,482)
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Net loss per Class A and Class B common share -
basic and diluted:
Loss from continuing operations $ (0.11) $ (0.12)
Loss from discontinued operations $ (0.01) $ (0.08)
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$ (0.12) $ (0.20)
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Weighted average number of Class A and Class B
common shares outstanding: Basic and diluted 45,119,838 32,632,563
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Following is the reconciliation of the Company’s consolidated Adjusted
EBITDA to consolidated GAAP net loss from continuing operations:
For the Three Months
Ended June 30,
-----------------------
($ in thousands) 2012 2011
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Net loss from continuing operations $ (4,868) $ (4,024)
Add Back:
Amortization of software development 250 212
Depreciation and amortization of property and
equipment 9,097 8,854
Amortization of intangible assets 158 92
Interest income (19) (51)
Interest expense 7,477 7,371
Other income, net (198) (46)
Income on investment in non-consolidated entity (31) --
Change in fair value of interest rate swap (421) 787
Stock-based expenses 305 --
Stock-based compensation 486 454
Merger and acquisition expenses 1,267 --
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Adjusted EBITDA $ 13,503 $ 13,649
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Adjustments related to the Phase I and Phase II
Deployments:
Depreciation and amortization of property and
equipment $ (8,939) $ (8,772)
Amortization of intangible assets (13) (12)
Income from operations (4,644) (5,426)
Intersegment services fees earned (1) 918 1,376
Adjusted EBITDA from non-deployment businesses $ 825 $ 815
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(1) Intersegment revenues of the Services segment represent service
fees earned from the Phase I and Phase II Deployments.
Contact:
For more information:
Addo Communications
Traci Tsuchiguchi/Patricia Dolmatsky-Nir
310-829-5400
SOURCE: Cinedigm Digital Cinema
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