FOR IMMEDIATE RELEASE
Cinedigm Digital Cinema Corp. Announces Fiscal Year 2010 and Fourth Quarter Results
Solid Q4 Year Over Year EBITDA Improvement as Phase 2 Takes Hold
MORRISTOWN, N.J. – June 10, 2010 –Cinedigm Digital Cinema Corp. (“Cinedigm” or the “Company”) (NASDAQ: CIDM) reported its fiscal fourth quarter and year end results as of March 31, 2010 with revenues of $16.4 million and $72.2 million, respectively. For the quarter revenues declined less than 1% from the previous year and for the full fiscal year 2010, revenues decreased 6.8% predominantly due to the contracted 16% step down in virtual print fee rates charged to the major movie studios, offset by revenue gains as the Company benefitted from Phase 2 deployments and better than expected screen turns in the seasonally slow fiscal fourth quarter. The Company posted Adjusted EBITDA1 (defined below) of $8.4 million, increasing 20.8% from $6.9 million in the fourth quarter one year ago as a result of increased digital cinema services fees and the positive impact of previously completed expense reductions. Adjusted EBITDA for the full year was $37.5 million, modestly lower than the 2009 Adjusted EBITDA of $38.3 million. The net loss in the fourth quarter of $15.0 million or $0.52 per share and the net loss for the year of $29.5 million or $1.03 per share include various non-cash items aggregating to $14.5 million or $0.51 per share. The Company ended the fiscal 2010 fourth quarter with $24.2M of cash and investments on its balance sheet of which $15.1 million is restricted for various uses, including the payment of interest expense. The fourth quarter and full year results reflect the reclassification of the Company’s Pavilion movie theater to discontinued operations as Cinedigm is engaged in a plan to s ell the theater.
FISCAL 2010 AND RECENT HIGHLIGHTS
| · | Revenues for the fiscal year 2010 fourth quarter were $16.4 million compared to $16.5 million in the year-ago period. Revenues for the fiscal year 2010 were $72.2 million compared to $77.5 million in fiscal year 2009. The full year 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 to lower advertising revenues. Partially offsetting these declines were Phase 2-related digital cinema services and software license fees. |
| · | Adjusted EBITDA in the fourth quarter was $8.4 million, an increase compared to the year-ago period of $6.9 million. Adjusted EBITDA for the fiscal year 2010 was $37.5 million, a small decrease compared to the fiscal year 2009 Adjusted EBITDA of $38.3 million. The strength of the Adjusted EBITDA growth as compared to revenue declines in each period was due to the growth of digital cinema service fees and the reduction in both direct operating costs, and selling, general and administrative expenses in the comparative periods from continued careful expense management. The primary expense reductions were in the areas of personnel costs and professional fees. |
| · | EBITDA, excluding our non-recourse Phase 1 and 2 deployments, improved sequentially to $(0.5) million in Q4 compared to cumulative $(4.4) million of EBITDA in those same divisions through the first 9 months of fiscal 2010 as Cinedigm began to benefit from positive operating leverage inherent in the expansion of digital cinema. |
| · | In May 2010, all of the Company’s Phase 1, non-recourse debt was refinanced with $172.5 million of new non-recourse debt on more favorable terms than the prior facility, including a reduction in interest rates and greater covenant flexibility, both of which we expect to enable Cinedigm to receive its contracted service fees. The new non-recourse facility has a 6-year maturity and received a Ba1 rating from Moody’s. |
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 t o 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
| · | During the quarter, Cinedigm signed 779 total screens for Phase 2 bringing total screens under Master License Agreements (MLAs) to 1,543 at March 31, 2010. Since the end of the quarter, an additional 101 screens have been added for a total of 1,644 screens under MLAs as of June 10, 2010. |
| · | Also during the quarter, Cinedigm, signed the first Exhibitor-Buyer Phase 2 MLAs using the National Association of Theatre Owners – Cinema Buying Group contract. |
Bud Mayo, Chief Executive Officer of Cinedigm, stated, “Overall, during the year, we’ve seen a major shift in momentum. Growth is returning to Cinedigm and we expect it to be evidenced in the fiscal 2011 financial results. Our balance sheet and cash flows are stronger. Our global leadership in digital cinema is continuing across all of our business units. The transformative effect of digital cinema is taking hold with well attended 3D live events and week-long theatrical engagements of content that could not have made it into the theatre five years ago.”
PHASE 2 UPDATE
Mayo added, "The completion of the NATO Cinema Buying Group Exhibitor-Buyer contract was a hallmark event this year and the culmination of more than a year of work. Nine CBG member theatres have signed agreements to participate in this new contract, and a total of 1,644 screens have joined the Phase 2 deployment plan. Cinedigm signed Phase 2 VPF agreements with Warner Bros. and Overture Films and now has VPF agreements with eight studios. To date we have installed 625 Phase 2 screens and more than 4,000 screens in total.”
CORPORATE UPDATE
Mayo concluded, “This was a year full of firsts, particularly in the Cinedigm Entertainment Group or ‘CEG’. CEG distributed two independent feature movies, each of which included live virtual premieres with the actors, delivered via satellite to theatres across the country. CEG also launched its ‘Million Dollar Movie’ program, which helps independent movie producers obtain distribution to digital cinemas. The group 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 and followed that in the spring with PHISH 3D which went to 223 theatres. In addition, CEG continued to enhance its CineLive 3D program with the successful broadcast of the NCAA Men’s Basketball Final Four and National Finals in early April. Finally, we are also growing our content delivery business as industry-wide digital deployments accelerate and we announced plans to double our satellite network.”
CONFERENCE CALL NOTIFICATION
Cinedigm will host a conference call to discuss its financial results at 9:00 a.m. Eastern on Thursday, June 10, 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 79533532. The replay will be accessible through Thursday, June 17th.
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. Cined igmTM 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'' o r 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
(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 | |
| | | March 31, | |
| | | 2009 | | | 2010 | |
| | | | | | | |
| Revenues | | $ | 16,494 | | | $ | 16,355 | |
| | | | | | | | | |
| Costs and expenses: | | | | | | | | |
Direct operating (exclusive of depreciation and amortization shown below) | | | 5,108 | | | | 4,514 | |
| Selling, general and administrative | | | 4,284 | | | | 3,466 | |
| Provision for doubtful accounts | | | 316 | | | | 127 | |
| Research and development | | | (19 | ) | | | 67 | |
| Stock-based compensation | | | 291 | | | | 368 | |
| Depreciation and amortization of property and equipment | | | 8,009 | | | | 8,158 | |
| Amortization of intangible assets | | | 765 | | | | 722 | |
| Total operating expenses | | | 18,754 | | | | 17,422 | |
Loss from continuing operations before other expense | | | (2,260 | ) | | | (1,067 | ) |
| | | | | | | | | |
| Interest income | | | 60 | | | | 77 | |
| Interest expense | | | (6,160 | ) | | | (8,843 | ) |
| Other expense, net | | | (266 | ) | | | (326 | ) |
| Change in fair value of interest rate swap | | | (683 | ) | | | 918 | |
| Change in fair value of warrant liability | | | - | | | | (5,500 | ) |
| Net loss from continuing operations | | | (9,309 | ) | | | (14,741 | ) |
Loss from discontinued operations | | | (37 | ) | | | (219 | ) |
| Net loss | | | (9,346 | ) | | | (14,960 | ) |
Preferred stock dividends | | | (50 | ) | | | (100 | ) |
| Net loss attributable to common stockholders | | $ | (9,396 | ) | | $ | (15,060 | ) |
| Net loss per Class A and B common share - basic and diluted | | | | | | | | |
| Loss from continuing operations | | $ | (0.34 | ) | | $ | (0.52 | ) |
| Loss from discontinued operations | | | (0.00 | ) | | | (0.01 | ) |
| | | $ | (0.34 | ) | | $ | (0.53 | ) |
| Weighted average number of Class A and B common shares outstanding: | | | | | | | | |
| Basic and diluted | | | 27,941,161 | | | | 28,781,294 | |
Cinedigm Digital Cinema Corp.
Adjusted EBITDA (as defined)
Reconciliation to GAAP Net Income
(In thousands)
(Unaudited)
| | | Three Months Ended | |
| | | March 31, | |
| | | 2009 | | | 2010 | |
| Net loss from continuing operations | | $ | (9,309 | ) | | $ | (14,741 | ) |
Add Back: | | | | | | | | |
| Amortization of software development | | | 76 | | | | 173 | |
| Depreciation and amortization of property and equipment | | | 8,009 | | | | 8,158 | |
| Amortization of intangible assets | | | 765 | | | | 722 | |
| Interest income | | | (60 | ) | | | (77 | ) |
| Interest expense | | | 6,160 | | | | 8,843 | |
| Other expense, net | | | 266 | | | | 326 | |
| Change in fair value of interest rate swap | | | 683 | | | | (918 | ) |
| Change in fair value of warrants | | | - | | | | 5,500 | |
| Stock-based expenses | | | 37 | | | | - | |
| Stock-based compensation | | | 291 | | | | 368 | |
| Adjusted EBITDA (as defined) | | $ | 6,918 | | | $ | 8,354 | |
CINEDIGM DIGITAL CINEMA CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for share and per share data)
(Unaudited)
| | | Twelve Months Ended | |
| | | March 31, | |
| | | 2009 | | | 2010 | |
| Revenues | | $ | 77,466 | | | $ | 72,205 | |
| | | | | | | | | |
| Costs and expenses: | | | | | | | | |
Direct operating (exclusive of depreciation and amortization shown below) | | | 21,423 | | | | 19,217 | |
| Selling, general and administrative | | | 17,818 | | | | 15,426 | |
| Provision for doubtful accounts | | | 587 | | | | 535 | |
| Research and development | | | 188 | | | | 218 | |
| Stock-based compensation | | | 943 | | | | 1,479 | |
| Impairment of goodwill | | | 4,565 | | | | - | |
| Depreciation and amortization of property and equipment | | | 32,016 | | | | 32,540 | |
| Amortization of intangible assets | | | 3,434 | | | | 2,977 | |
| Total operating expenses | | | 80,974 | | | | 72,392 | |
Loss from continuing operations before other expense | | | (3,508 | ) | | | (187 | ) |
| | | | | | | | | |
| Interest income | | | 371 | | | | 313 | |
| Interest expense | | | (26,481 | ) | | | (33,677 | ) |
| Other expense, net | | | (753 | ) | | | (734 | ) |
| Gain on extinguishment of debt | | | - | | | | 10,744 | |
| Change in fair value of interest rate swap | | | (4,529 | ) | | | 2,994 | |
| Change in fair value of warrant liability | | | - | | | | (8,463 | ) |
| Net loss from continuing operations | | | (34,900 | ) | | | (29,010 | ) |
Loss from discontinued operations | | | (2,468 | ) | | | (498 | ) |
| Net loss | | | (37,368 | ) | | | (29,508 | ) |
Preferred stock dividends | | | (50 | ) | | | (400 | ) |
| Net loss attributable to common stockholders | | $ | (37,418 | ) | | $ | (29,908 | ) |
| Net loss per Class A and B common share - basic and diluted | | | | | | | | |
| Loss from continuing operations | | $ | (1.27 | ) | | $ | (1.03 | ) |
| Loss from discontinued operations | | | (0.09 | ) | | | (0.02 | ) |
| | | $ | (1.36 | ) | | $ | (1.05 | ) |
| Weighted average number of Class A and B common shares outstanding: | | | | | | | | |
| Basic and diluted | | | 27,476,420 | | | | 28,624,154 | |
Cinedigm Digital Cinema Corp.
Adjusted EBITDA (as defined)
Reconciliation to GAAP Net Income
(In thousands)
(Unaudited)
| | | Twelve Months Ended | |
| | | March 31, | |
| | | 2009 | | | 2010 | |
| Net loss from continuing operations | | $ | (34,900 | ) | | $ | (29,010 | ) |
Add Back: | | | | | | | | |
| Amortization of software development | | | 677 | | | | 659 | |
| Depreciation and amortization of property and equipment | | | 32,016 | | | | 32,540 | |
| Amortization of intangible assets | | | 3,434 | | | | 2,977 | |
| Interest income | | | (371 | ) | | | (313 | ) |
| Interest expense | | | 26,481 | | | | 33,677 | |
| Other expense, net | | | 753 | | | | 734 | |
| Extinguishment of debt | | | - | | | | (10,744 | ) |
| Impairment of goodwill | | | 4,565 | | | | - | |
| Change in fair value of interest rate swap | | | 4,529 | | | | (2,994 | ) |
| Change in fair value of warrants | | | - | | | | 8,463 | |
| Stock-based expenses | | | 193 | | | | - | |
| Stock-based compensation | | | 943 | | | | 1,479 | |
| Adjusted EBITDA (as defined) | | $ | 38,320 | | | $ | 37,468 | |
CINEDIGM DIGITAL CINEMA CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share data)
(Unaudited)
| | | March 31, | |
| | | 2009 | | | 2010 | |
| ASSETS | | | | | | |
| Current assets | | | | | | |
| Cash and cash equivalents | | $ | 15,828 | | | $ | 9,094 | |
| Restricted available-for-sale investments | | | - | | | | 5,927 | |
| Accounts receivable, net | | | 13,847 | | | | 13,510 | |
| Deferred costs | | | 3,936 | | | | 3,046 | |
| Unbilled revenue, current portion | | | 3,082 | | | | 4,337 | |
| Prepaid and other current assets | | | 1,569 | | | | 1,412 | |
| Notes receivable, current portion | | | 616 | | | | 737 | |
| Assets held for sale | | | 7,656 | | | | 7,255 | |
| Total current assets | | | 46,534 | | | | 45,318 | |
| Restricted available-for-sale investments | | | - | | | | 2,004 | |
| Restricted cash | | | 10,756 | | | | 7,168 | |
| Security deposits | | | 385 | | | | 280 | |
| Property and equipment, net | | | 237,536 | | | | 215,814 | |
| Intangible assets, net | | | 10,707 | | | | 7,730 | |
| Capitalized software costs, net | | | 3,653 | | | | 3,831 | |
| Goodwill | | | 6,261 | | | | 6,261 | |
| Deferred costs | | | 3,967 | | | | 6,763 | |
| Unbilled revenue, net of current portion | | | 1,253 | | | | 964 | |
| Notes receivable, net of current portion | | | 959 | | | | 816 | |
| Accounts receivable, net of current portion | | | 386 | | | | 198 | |
| Total assets | | $ | 322,397 | | | $ | 297,147 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| Current liabilities | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 14,591 | | | $ | 7,820 | |
| Current portion of notes payable, non-recourse | | | 24,824 | | | | 26,508 | |
| Current portion of notes payable | | | 424 | | | | 185 | |
| Current portion of deferred revenue | | | 5,533 | | | | 5,892 | |
| Current portion of customer security deposits | | | 314 | | | | 60 | |
| Current portion of capital leases | | | 69 | | | | 171 | |
| Liabilities as part of held for sale assets | | | 6,178 | | | | 6,112 | |
| Total current liabilities | | | 51,933 | | | | 46,748 | |
| Notes payable, non-recourse, net of current portion | | | 170,624 | | | | 146,793 | |
| Notes payable, net of current portion | | | 55,333 | | | | 69,669 | |
| Capital leases, net of current portion | | | 125 | | | | 78 | |
| Warrant liability | | | - | | | | 19,195 | |
| Fair value of interest rate swap | | | 4,529 | | | | 1,535 | |
| Deferred revenue, net of current portion | | | 1,057 | | | | 1,828 | |
| Customer security deposits, net of current portion | | | 9 | | | | 9 | |
| Total liabilities | | | 283,610 | | | | 285,855 | |
| Commitments and contingencies | | | | | | | | |
| Stockholders' equity: | | | | | | | | |
Preferred stock, $0.001 par value per share; 15,000,000 shares Series A 10%-$0.001 par value per share; 20 shares authorized; 8 shares issued and outstanding, at March 31, 2009 and March 31, 2010, respectively. Liquidation preference $4,050 | | | 3,476 | | | | 3,583 | |
Class A common stock, $0.001 par value per share; 65,000,000 and 75,000,000 shares authorized at March 31, 2009 and March 31, 2010, respectively; 27,544,315 and 28,104,235 issued and 27,492,875 and 28,052,795 shares outstanding at March 31, 2009 and March 31, 2010, 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 March 31, 2010, respectively | | | 1 | | | | 1 | |
Additional paid-in capital | | | 173,565 | | | | 175,937 | |
Treasury Stock, at cost; 51,440 Class A shares | | | (172 | ) | | | (172 | ) |
Accumulated deficit | | | (138,110 | ) | | | (168,018 | ) |
Accumulated other comprehensive loss | | | - | | | | (67 | ) |
| Total stockholders' equity | | | 38,787 | | | | 11,292 | |
| | | $ | 322,397 | | | $ | 297,147 | |
