Cinedigm Digital Cinema Corp. Announces Fiscal Year 2010 Second Quarter Results
Recent $75 Million Equity Investment, $100 Million Credit Facility Create Platform for Growth
- Press Release
- Source: Cinedigm Digital Cinema Corp.
- On 8:00 am EST, Thursday November 12, 2009
MORRISTOWN, NJ--(Marketwire - 11/12/09) - Cinedigm Digital Cinema Corp. ("Cinedigm" or the "Company") (NASDAQ:CIDM - News) reported a 6.5% sequential quarterly increase in revenues, to $19.9 million for the fiscal 2010 second quarter ended September 30, 2009. Revenues declined 9% versus the year-ago period. The Company posted Adjusted EBITDA(1) (defined below) of $9.7 million sequentially increasing 3.2% from $9.4 million in the first quarter. EBITDA declined 11.6% versus the year-ago period EBITDA of $10.9 million. The Net loss in the second quarter of $1.1 million or $0.04 per share includes various non-cash items aggregating $3.0 million or $0.10 per share, compared to similar items of $11.0 million or $0.40 per share in the year-ago period. The Company ended the fiscal 2010 second quarter with $37.5 million of cash and investments (including $17.7 million of restricted cash and investments) on its balance sheet.
SECOND QUARTER HIGHLIGHTS
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-- Revenues for the fiscal year 2010 second quarter were $19.9 million
compared to $21.8 million in the year-ago period. This decline was
primarily due to the previously announced November 2008 contracted 16% step-
down in Virtual Print Fee (VPF) rates charged to the major movie studios
via long term contracts and to additional movie studios on a pay for use
basis. Partially offsetting this rate decline was a 5% increase in VPFs
earned per screen during the quarter due to improved screen turnover.
-- Adjusted EBITDA in the second quarter was $9.7 million, an increase of
3.2% on a sequential quarterly basis from $9.4 million in the first quarter
and a decrease of 11.6% from $10.9 million in the year-ago period. The
improvement in Adjusted EBITDA as compared to the first quarter is
primarily the result of seasonally increased revenues and careful expense
management.
-- Strengthened balance sheet with a $75 Million Senior Note and Warrant
transaction to refinance existing debt.
-- Launched Exhibitor-Buyer Phase 2 ownership option with 2 exhibitor
partners.
-- Initiated new detailed financial segment reporting to improve business
management tools and increase transparency to investors.
Bud Mayo, Chief Executive Officer of Cinedigm, stated, "The second quarter brought a major shift to Cinedigm's capitalization with the $75 million refinancing from Sageview Capital of our $55 million senior notes and pre-payment of $5 million of Phase 1 non-recourse debt. This investment was the critical first step necessary to enable Cinedigm to strengthen its balance sheet and restart its growth during this challenging economic environment. The second step was the signing of commitment letters at the end of October for a $100 million non-recourse Phase 2 credit facility with GE Capital and Soci�t� G�n�rale. 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.. Our new CFO and Chief Strategy Officer, Adam Mizel, has already proven to be an excellent addition to our corporate team. He has been critical in leading our financing efforts, is communicating with investors regularly, will be speaking at more financial conferences, and recommended our new financial reporting structure in an effort to increase financial transparency."
PHASE 2 UPDATE
Mayo added, "In addition to the recently announced commitment to provide senior debt to finance up to 2,133 screens by GE Capital and Soci�t� G�n�rale, Cinedigm launched its exhibitor-buyer program which enables an exhibitor to finance its own equipment purchase with Cinedigm's support and retention as the asset servicer managing the VPF revenue stream in return for a share of revenues. Georgia Theaters and Great Escape, with a combined 457 screens, were our launch partners. We have a robust pipeline of exhibitors interested in both of these options. Finally, Cinedigm signed Phase 2 VPF agreements with Warner Bros. and Overture Films and now has VPF agreements with 8 significant studios. To date we have installed 171 Phase 2 screens and almost 4,000 screens in total."
CORPORATE UPDATE
Mayo concluded, "It has been an exciting several months at Cinedigm and we have much more to accomplish. We expect to close on our $100 million Phase 2 facility in December or early January and are actively building our exhibitor pipeline for 2010 deployments. We are also growing our content delivery business as we expand our satellite network with proceeds from our financing and actively seek additional delivery customers. Finally, our Entertainment Group distributed its second independent film, 'Opa!,' in October and will be launching its 3-D Concert Series with Dave Matthews Band in theaters for a full week beginning December 11, 2009. As we continue to build on this momentum, we look forward to sharing our progress."
CONFERENCE CALL NOTIFICATION
Cinedigm will host a conference call to discuss its financial results at 9:00 a.m. Eastern on Thursday, November 12, 2009. The conference can be accessed by dialing 719.325.4762 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, www.cinedigmcorp.com. A replay of the call will be available after 1:30 p.m. Eastern at 719.457.0820 or 888.203.1112, passcode 4131313. The replay will be accessible through Thursday, November 19th.
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 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 films provide a complete suite of services required to enable the digital theater conversion. 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.
(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.
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CINEDIGM DIGITAL CINEMA CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for share and per share data)
(Unaudited)
Three Months Ended
September 30,
-------------------------
2008 2009
------------ ------------
Revenues $ 21,849 $ 19,881
Costs and expenses:
Direct operating (exclusive of depreciation and
amortization shown below) 6,732 6,066
Selling, general and administrative 4,187 4,073
Provision for doubtful accounts 145 136
Research and development 93 64
Stock-based compensation 200 441
Depreciation and amortization of property and
equipment 8,133 8,323
Amortization of intangible assets 901 750
------------ ------------
Total operating expenses 20,391 19,853
------------ ------------
Income from operations 1,458 28
Interest income 99 95
Interest expense (6,990) (8,791)
Other income (expense), net (176) (158)
Gain on extinguishment of debt - 10,744
Change in fair value of interest rate swap (687) 540
Change in fair value of warrants - (3,576)
------------ ------------
Net loss (6,296) (1,118)
Preferred stock dividends - (100)
------------ ------------
Net loss attributable to shareholders $ (6,296)$ (1,218)
============ ============
Net loss per Class A and B common share - basic
and diluted $ (0.23)$ (0.04)
============ ============
Weighted average number of Class A and B common
shares outstanding:
Basic and diluted 27,536,371 28,663,959
============ ============
Cinedigm Digital Cinema Corp.
Adjusted EBITDA (as defined)
Reconciliation to GAAP Net Income
(In thousands)
(Unaudited)
Three Months Ended
September 30,
-------------------------
2008 2009
------------ ------------
Net loss $ (6,296)$ (1,118)
Add Back:
Amortization of software development 194 161
Depreciation of property and equipment 8,133 8,323
Amortization of intangible assets 901 750
Interest income (99) (95)
Interest expense 6,990 8,791
Other (income) expense, net 176 158
Extinguishment of debt - (10,744)
Change in fair value of interest rate swap 687 (540)
Change in fair value of warrants - 3,576
Stock-based expenses 45 (37)
Stock-based compensation 200 441
------------ ------------
Adjusted EBITDA (as defined) $ 10,931 $ 9,666
============ ============
CINEDIGM DIGITAL CINEMA CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for share and per share data)
(Unaudited)
Six Months Ended
September 30,
-------------------------
2008 2009
------------ ------------
Revenues $ 42,419 $ 38,547
Costs and expenses:
Direct operating (exclusive of depreciation and
amortization shown below) 12,529 11,528
Selling, general and administrative 9,020 7,942
Provision for doubtful accounts 173 264
Research and development 100 104
Stock-based compensation 358 766
Depreciation and amortization of property and
equipment 16,268 16,476
Amortization of intangible assets 1,848 1,515
------------ ------------
Total operating expenses 40,296 38,595
------------ ------------
Income (loss) from operations 2,123 (48)
Interest income 223 135
Interest expense (14,166) (16,341)
Other income (expense), net (326) (301)
Gain on extinguishment of debt - 10,744
Change in fair value of interest rate swap 1,565 1,223
Change in fair value of warrants - (3,576)
------------ ------------
Net loss (10,581) (8,164)
Preferred stock dividends - (200)
------------ ------------
Net loss attributable to shareholders $ (10,581)$ (8,364)
============ ============
Net loss per Class A and B common share - basic
and diluted $ (0.39)$ (0.29)
============ ============
Weighted average number of Class A and B common
shares outstanding:
Basic and diluted 27,202,593 28,475,217
============ ============
Cinedigm Digital Cinema Corp.
Adjusted EBITDA (as defined)
Reconciliation to GAAP Net Income
(In thousands)
(Unaudited)
Six Months Ended
September 30,
-------------------------
2008 2009
------------ ------------
Net loss $ (10,581)$ (8,164)
Add Back:
Amortization of software development 387 323
Depreciation of property and equipment 16,268 16,476
Amortization of intangible assets 1,848 1,515
Interest income (223) (135)
Interest expense 14,166 16,341
Other (income) expense, net 326 301
Extinguishment of debt - (10,744)
Change in fair value of interest rate swap (1,565) (1,223)
Change in fair value of warrants - 3,576
Stock-based expenses 119 -
Stock-based compensation 358 766
------------ ------------
Adjusted EBITDA (as defined) $ 21,103 $ 19,032
============ ============
CINEDIGM DIGITAL CINEMA CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
(Unaudited)
March September
31, 2009 30, 2009
------------ ------------
ASSETS
Current assets
Cash and cash equivalents $ 26,329 $ 19,732
Restricted short-term investment securities - 5,594
Accounts receivable, net 13,884 11,527
Deferred costs 3,936 2,999
Unbilled revenue, current portion 3,082 3,522
Prepaid and other current assets 1,798 3,159
Notes receivable, current portion 616 170
------------ ------------
Total current assets 49,645 46,703
Restricted long-term investment securities - 4,974
Restricted cash 255 7,161
Security deposits 424 427
Property and equipment, net 243,124 235,853
Intangible assets, net 10,707 9,192
Capitalized software costs, net 3,653 3,738
Goodwill 8,024 8,024
Deferred costs 3,967 7,735
Unbilled revenue, net of current portion 1,253 1,062
Notes receivable, net of current portion 959 878
Accounts receivable, net of current portion 386 386
------------ ------------
Total assets $ 322,397 $ 326,133
============ ============
Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued expenses $ 14,954 $ 8,995
Current portion of notes payable, non-recourse 24,824 24,758
Current portion of notes payable 424 177
Current portion of capital leases 175 700
Current portion of deferred revenue 5,535 5,860
Current portion of customer security deposits 314 314
------------ ------------
Total current liabilities 46,226 40,804
Notes payable, non-recourse, net of current
portion 170,624 162,112
Notes payable, net of current portion 55,333 65,627
Capital leases, net of current portion 5,832 5,778
Warrant liability - 14,308
Fair value of interest rate swap 4,529 3,306
Deferred revenue, net of current portion 1,057 2,013
Customer security deposits, net of current
portion 9 9
------------ ------------
Total liabilities 283,610 293,957
------------ ------------
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 September
30, 2009, respectively. Liquidation preference
$4,050 3,476 3,529
Class A common stock, $0.001 par value per
share; 65,000,000 shares authorized;
27,544,315 and 28,084,315 issued and
27,492,875 and 28,032,875 shares outstanding
at March 31, 2009 and September 30, 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 September 30, 2009, respectively 1 1
Additional paid-in capital 173,565 175,281
Treasury Stock, at cost; 51,440 Class A shares (172) (172)
Accumulated deficit (138,110) (146,474)
Accumulated other comprehensive loss - (17)
------------ ------------
Total stockholders' equity 38,787 32,176
------------ ------------
$ 322,397 $ 326,133
============ ============
Contact:
Contact:
Adam M. Mizel
Cinedigm Digital Cinema
(973) 290.0080
Email Contact
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