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GENIUS PRODUCTS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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 December 2005 |
 2 SAFE HARBOR STATEMENT Except for statements relating solely to historical matters, the statements contained in these slides are forward- looking statements. The forward-looking statements reflect assumptions and involve risks and uncertainties that may affect Genius Products’ business, forecasts, projections and prospects, and cause actual results to differ materially from those in these forward-looking statements. These forward-looking statements include, but are not limited to: statements relating to the closing of the transaction with The Weinstein Company, including the anticipated timing of the closing; statements regarding the expected benefits of the transaction; statements relating to the future business and financial performance of Genius Products, the Distributor and/or The Weinstein Company, including statements regarding Genius Products’ revenues and operating income, as well as other projections; statements regarding future theatrical and direct-to-video releases, including the anticipated number and timing of such releases; and statements regarding the terms of the transaction, including the terms of the distribution agreement with The Weinstein Company and the ability to achieve the related performance measures. Other such risks and uncertainties include Genius Products’ ability to grow its business, to obtain additional licenses and to meet anticipated release schedules, as well as other matters described in Genius Products’ filings with the Securities and Exchange Commission. Genius Products assumes no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of these slides. Additional Important Information will be Filed with the SEC We plan to file with the Securities and Exchange Commission, or SEC, and mail to our stockholders a proxy statement in connection with the transaction with TWC. Investors are urged to read the proxy statement and any other relevant documents when they become available because they will contain important information. Investors will be able to obtain free copies of the proxy statement and other documents that we file with the SEC through the Web site maintained by the SEC at www.sec.gov. In addition, investors will be able to obtain copies of the proxy statement free of charge from us, by contacting our proxy solicitor: The Altman Group, 1200 Wall Street West, Third Floor, Lyndhurst, NJ, 07071 or 800-820-2416. Our directors, executive officers and certain other members of management may be deemed to be soliciting proxies in favor of the proposed transaction from our stockholders. For information about these directors, executive officers and members of management, please refer to our Annual Report on Form 10-KSB (as amended) for the fiscal year ended December 31, 2004 and our other filings with the SEC, which are available at the SEC’S website (www.sec.gov) and from us at the address provided in the preceding paragraph. |
 3 COMPANY OVERVIEW • Genius Products, Inc. (“GNPI”) (OTCBB: GNPI>OB) is a leading, fully integrated supplier of branded entertainment content and products to retailers in the U.S. – Four key content segments: Family, Cinema, Classics and Lifestyle • In December 2005, The Weinstein Company (TWC) and Genius Products signed agreements to form a new venture to exploit the exclusive U.S. home entertainment distribution rights of all content owned or controlled by TWC as well as the existing GNPI business • GNPI has major studio marketing, merchandising expertise, and access to the Top 10 U.S. retailers. – Strong relationships with all national and regional retailers – World class management team with significant industry experience • GNPI has a highly effective supply chain and a scalable operating structure • Headquartered in Solana Beach, CA with offices in Santa Monica, CA and NYC, NY |
 4 SENIOR MANAGEMENT Name Title Background Stephen K Bannon Chairman Bannon & Co., Goldman Sachs Trevor Drinkwater CEO Take Two Interactive, Warner Home Video Nestle Christine Martinez EVP/GM, Genius Products Warner Home Video Shawn Howie, CPA EVP and CFO Movielink, The Irvine Company Rodney Satterwhite EVP, Operations Warner Home Video, Giant Food Inc. David Snyder EVP, Content & Acquisition Walt Disney Television International Michael Radiloff EVP, Marketing Warner Home Video Mitch Budin EVP, Sales Dreamworks, Warner Home Video Michel Urich General Counsel Nara Bancorp • Genius Products has assembled a world class management team with significant industry experience |
 5 GENIUS PRODUCTS The Genius Products Brand Strategy: • Develop highly recognizable and established consumer brands • Products are developed to meet consumer demands – Relevant content – Underserved niches – Price/Value proposition – New technologies – Trends • Brand partners support DVD releases with national advertising and promotions • Create a brand portfolio by leveraging new releases and expanding catalog breadth |
 6 BRAND PORTFOLIO • Genius’ portfolio consists of high-quality, consumer friendly brands |
 7 CONTENT AND MARKETING STRATEGIES • Release movies or TV series with enduring appeal or strong cult following • Offer balanced segment portfolio – multi disc sets and “best of”s • Schedule releases to leverage key retail resets, holiday periods and appropriate tie-ins • Partner supported national advertising campaigns • Source “on-trend” and unique content for DVD exploitation • Schedule releases to coincide with “peak” awareness periods/promotions and retail dates • Support releases with relevant in-program advertising and third-party cross promotions • Develop added-value content to enhance consumer viewing experience beyond the film • Time releases to coincide with heavy ‘film festival’ activity • Develop trade promotions that reward merchandising efforts at retail, leveraging all Indie brands • Support segment with targeted print advertising and aggressive PR • Establish core business with Big Brands and ‘the next Big thing’ • Utilize production relationships to super serve underserved audiences with niche and activity product • Generate trial and awareness via Value programs and through secondary in-store placement programs • Refresh proprietary brands, including heavy licensing and third-party promotions • Direct in-store messaging and print advertising to Mom, focusing on brand-value equation Content & Marketing Strategies Segment • Genius’ core business strategies are focused around delivering unique content and consumer value through ‘retail-centric’ solutions |
 8 DIFFERENTIATED DISTRIBUTION STRATEGY • Genius Products utilizes a specialized distribution strategy to ensure appropriate distribution for each brand, securing both in-line placement and promotional space • Unique trade promotions and retailer-sponsored advertising stimulate consumer traffic • Brand partners support the distribution strategy with national media and cross promotions BRANDED DISTRIBUTION NETWORK |
 9 RETAILER/CHANNEL DISTRIBUTION • Genius distribution reaches a wide variety of retailers relevant to our content partners across all channels Mass Electronics Music Rental Internet Wholesale Club Toy Wal*Mart Best Buy Transworld Blockbuster Amazon Costco Toys R Us Target Circuit City Musicland Hollywood Video Buy.com BJ's KB Toys Kmart Radio Shack Tower Hastings ShopNBC Sams Shopko Fry's Wherehouse Movie Gallery Infinity Bi-mart Pamida Brandsmart Virgin Family Video All Click & Mortar Meijer Nebraska Furn. Mart Netflix Fred Meyer Zellers Book Distribution Discount Mass Military Grocery Drug Convenience Barnes & Noble Ingram Dollar General Eurpac Safeway CVS 7-Eleven Borders VPD 99 Cent Store AAFES Kroger Eckerds Circle K Ind. Book Stores AEC Dollar Tree Albertsons Rite Aid Flying J Baker & Taylor Christmas Tree Stores Ahold Walgreens Mobil ERI TJ Maxx A&P Sav-on Exxon ROI Big Lots Publix Longs Misc Others Navarre HEB Misc. Regionals Office Channel Department Game Specialty Christian Book Stores Specialty Direct Response Other Staples Sears Electronics Boutique Family Christian JR Music Home Shopping Nework Petco Office Depot Kohls Game Stop Lifeway Newbery Comics QVC PetSmart Office Max Macy's Christian Book Columbia House Cracker Barrel CompUSA Burlington Coat Fac. Spring Arbor Spencer Gifts Mail Order Sporting Good Stores Lifestyle Retailers |
 10 AMERICAN VANTAGE MEDIA • Theatrical releasing began under the Wellspring banner in 1999 quickly earning the company a high profile reputation as an art house distributor of highly acclaimed films by world- renowned directors. • The core business comprises classic films, new foreign and American independent films and wellness programs. • Genius Products acquired Wellspring Media in March,2005 • The Wellspring film library boasts over 700 films many of which are critically acclaimed art house films |
 11 RETAIL MARKETING • Utilize historical data – gross ships, returns, POS – of comparable titles to establish account volume objectives • Develop sales programs to leverage in-store events and retailer’s go-to-market strategy • Develop unique and value-added versions of releases to establish point of differentiation for key retailers • Execute appropriate merchandising vehicles to optimize product distribution and customer touch points – corrugate merchandisers, pallets, long-boxes and custom fixtures • Design point of purchase materials that exploit each retailers consumer experience • Build product configurations that ensure efficient distribution and minimize returns Genius will leverage its channel expertise and retail relationships to deliver retailer specific in-store tactics: |
 12 OPERATIONS COMPETENCY Our operations objective is to match or exceed execution, service, and efficiency levels of the major studios by: • Building a responsive, flat organizational infrastructure with scalability • Leveraging relationships and flexibility to source favorable pricing • Integrated sales and analytics to support product planning to retail execution • Incorporating superior systems, reporting and resource management capabilities |
 13 WHY CONTENT OWNERS CHOOSE GENIUS PRODUCTS? • Strong management team with extensive home video and packaged goods sales, marketing and distribution expertise • Open access to all levels of key management • Expertise in brand portfolio management • Nimble and flexible infrastructure that can respond quickly to changing market dynamics and retailer needs • Direct access to a wide retail distribution network • Competitive operations and supply chain management • Transparent financial and sales information sharing |
 Strategic Transaction with The Weinstein Company |
 15 THE WEINSTEIN TRANSACTION OVERVIEW • TWC is the new enterprise of Bob and Harvey Weinstein – Separated from Disney in March 2005, officially launched October 1, 2005 – First film “Derailed” released in November 2005 has already grossed $35 million in box office revenues to date • TWC owns rights to: – Over 80 films and film projects – Produce, co-finance and co-distribute with Disney sequels to a number of established film franchises – Twelve television projects, including future seasons of established series Project Greenlight and Project Runway – Preferential relationships with a number of well-known and highly- successful writers, directors and producers – The well-known Dimension Films name – The Rainbow / IFC content library Since March, TWC has acquired 25 additional projects • TWC is fully financed by Goldman Sachs and array of international strategic and financial partners for approximately $1B ~ $490M equity. |
 16 TRANSACTION SUMMARY • The current operating business of GNPI will be transferred to Genius Products, LLC (30% owned by GNPI and 70% by TWC) – Genius Products, LLC will receive the U.S. DVD distribution rights for most all TWC releases and future library. TWC will receive a 70% economic interest in Genius Products, LLC and a 70% voting interest in GNPI via preferred voting stock. – GNPI will contribute most all of its assets and operations to the LLC, and will retain a 30% economic interest in the LLC – GNPI shareholders will retain 100% common equity in GNPI with 30% voting rights (subject to TWC taking 70% of Common if it redeems its LLC interests) • GNPI will own exclusive U.S. DVD distribution rights to most all content produced or controlled by TWC, including all theatrical or DTV titles, as well as all Rainbow/IFC titles – Exclusive distribution rights for 5 years – Rights in perpetuity on any content released on DVD by GNPI during the term • Anticipated products to be distributed each year via the TWC transaction will include: – An average of 2 theatrical releases per month – Approximately 20-30 direct-to-video releases per year – Co-produced content from Rainbow/IFC – Other Acquisitions |
 17 A PROVEN TRACK RECORD |
 18 IMMEDIATE PRODUCT FLOW |
 19 • Summary of data discussed during the December 6, 2005 investor conference call EXPECTED IMPACT OF TRANSACTION • 2006 & 2007 – 70% majority interest allocated to The Weinstein Company • 2006 – Expect to utilize NOL of over $30 million to reduce the effective tax rate to 10% - 15% • 2007 – Expect to utilize NOL to reduce the effective tax rate to 25% - 30% • 2006 & 2007 – Approximate 60 million common shares outstanding after the recent financing Other • 2006 & 2007 - Estimate operating margin of approximately 4% • 2006 & 2007 - Gross margin should improve from the 33% to approach 40% target • 2006 & 2007 – G&A expenses of $15 - $20 million annually Operating Income • 2006 & 2007 – Expect to release an average of 2 films per month through entire agreement • 2006 – Estimated an average $20-$25 million net revenue per release • 2007 - Per-title net revenue will likely increase by 20% in 2007 over 2006 • 2006 & 2007 - Anticipate releasing approximately 30 direct-to-video titles per year • 2007 - Library Sales (>6 mos) should represent an additional 20%- 30% of total net revenue • 2006 - Net revenue expected to double or triple over 2005 • 2007 - Net revenue expected to increase by 25% over 2006 Revenue Weinstein Division Genius Division Description NOTE: The information in the chart include estimates derived from a preliminary analysis completed by GNPI management and do not constitute financial projections or guidance as to future results |
  20 CAPITALIZATION Transaction capitalization summary: Total Genius Weinstein Common Products (MM) Company (MM) Shares Equv. (MM) Common Shares Outstanding 59.8 0.0 59.8 Common Shares Issuable to TWC (1) 0.0 139.5 139.5 Options and Warrants (2) 34.3 0.0 34.3 (2) Weighted Average Exercise Price of $1.96 (1) Common Shares Issuable to TWC convert to common on a 1: 1 basis and will increase on pro rata basis as options and warrants get excerised |
 21 ADDITIONAL GROWTH OPPORTUNITIES • Distribution of content from Rainbow IFC library • Content acquisition using proceeds from recent financing and excess operating cash flow • Margin improvement through acquisition of higher quality content • Leverage The Weinstein Company titles to expand Genius Brand content • Large distribution footprint and scalable platform for additional content and products • Cash from warrants is retained by GNPI for use in operations • Potential international opportunities |
 THANK YOU |