Exhibit 99.1
RealD Inc. Reports First Quarter Fiscal 2011 Financial Results
LOS ANGELES (August 2, 2010) - RealD Inc. (NYSE: RLD), a leading global licensor of 3D technologies, today announced the Company’s financial results for its first quarter of fiscal 2011 ended June 25, 2010.
For the first fiscal quarter, RealD reported net revenue of $64.5 million, compared to $25.6 million for the first quarter of fiscal 2010, an increase of 152 percent.
GAAP net income attributable to common stockholders for the first fiscal quarter was $2.9 million, or $0.09 per diluted share, compared to a GAAP net loss attributable to common stockholders of $9.8 million, or ($0.41) per diluted share, for the first quarter of fiscal 2010.
Adjusted EBITDA for the first fiscal quarter was $11.0 million, compared to $2.3 million for the first quarter of fiscal 2010, an increase of 387 percent. Adjusted EBITDA, which is a non-GAAP financial measure, is defined below and reconciled to net income (loss), the most comparable measure under GAAP, in the section entitled “Use of non-GAAP financial measures.”
As of June 25, 2010, the Company had deployed approximately 7,500 RealD enabled screens, an increase of 188% from 2,600 screens at June 26, 2009.
During the first fiscal quarter, the Company generated $9.7 million in cash from operating activities and closed the first fiscal quarter with overall cash and investments of $19.5 million.
“Our first quarter financial results highlight the power and scalability of our 3D technology licensing model,” said Michael V. Lewis, Chairman and Chief Executive Officer of RealD. “With a history of 3D technology innovation, we have developed a brand that is synonymous with delivering a premium 3D experience. In the quarter, we continued to extend the reach of our RealD 3D technology platform through new partnerships in both the cinema and consumer markets. We look forward to building upon the strong foundation that we’ve built in the quarters and years to come.”
On July 21, 2010, RealD completed its initial public offering of 14,375,000 shares of common stock, including 1,875,000 shares of common stock from the full exercise of the underwriters’ over-allotment option, at $16.00 per share. The company sold 6,000,000 shares and existing stockholders sold an aggregate of 8,375,000 shares. The initial public offering generated net proceeds to the company of approximately $82.6 million, after deducting underwriting discounts and estimated offering expenses payable by RealD. RealD did not receive any proceeds from the sale of shares by the selling stockholders.
Mr. Lewis commented, “The successful completion of our initial public offering marks an exciting step in our company’s history. We are at the forefront of growing consumer demand for a high-quality, immersive visual experience that 3D uniquely provides. Our global and highly scalable 3D technology licensing platform positions RealD to capture the current opportunity in 3D cinema and the emerging opportunity in the 3D consumer electronics market.”
Conference call information
Members of RealD management will host a conference call to discuss its first quarter fiscal 2010 financial results beginning at 4:30 pm ET (1:30 pm PT), today, August 2, 2010. The conference will be broadcast live over the Internet, hosted at the Investor Relations section of the company’s website at www.reald.com, and will be archived online upon completion of the call.
Cautionary note on forward-looking statements
This press release includes forward-looking information and statements, including but not limited to, statements concerning anticipated future financial and operating performance, RealD’s ability to continue to derive substantial revenue from the licensing of RealD’s 3D technologies for use in the motion picture industry, as well as RealD’s ability to generate substantial revenue from the licensing of RealD’s 3D technologies for use in the 3D consumer electronics market; the progress, timing and amount of expenses associated with RealD’s research and development activities; market and industry trends, including growth in 3D content; and RealD’s projected operating results. These statements are based on our management’s current expectations and beliefs, as well as a number of assumptions concerning future events. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside our management’s control that could cause actual results to differ materially from the results discussed in the forward-looking statements. The company’s quarterly report on Form 10-Q for the three months ended June 25, 2010 includes a more detailed discussion of the risks and uncertainties that may cause that could cause actual results to differ materially from the results discussed in the forward-looking statements.
RealD undertakes no obligation to update publicly the information contained in this press release, or any forward-looking statements, to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.
Use of non-GAAP financial measures
To supplement RealD’s financial statements presented on a GAAP basis, RealD provides Adjusted EBITDA as a supplemental measure of its performance. The company defines Adjusted EBITDA as net income (loss), plus interest expense, net, income taxes and depreciation and amortization, as further adjusted to eliminate the impact of certain items not considered indicative of the company’s core operating performance.
RealD presents Adjusted EBITDA in reporting its financial results to provide investors with an additional tool to evaluate RealD’s operating results in a manner that focuses on what RealD’s management believes to be its ongoing business operations. RealD’s management does not itself, nor does it suggest that investors should, consider any such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Adjusted EBITDA is used by management for planning purposes, including the preparation of internal budgets, forecasts and strategic plans; in analyzing the effectiveness of business strategies; to evaluate potential acquisitions; in making compensation decisions; in communications with its Board of Directors concerning financial performance; and as part of the company’s credit agreement in which Adjusted EBITDA is used to measure compliance with certain covenants.
About RealD Inc.
RealD is a leading global licensor of 3D technologies. RealD’s extensive intellectual property portfolio is used in applications that enable a premium 3D viewing experience in the theater, the home and elsewhere. RealD licenses its RealD Cinema Systems to motion picture exhibitors that show 3D motion pictures and alternative 3D content. RealD also provides its RealD Display, active and passive eyewear, RealD Format and gaming technologies to consumer electronics manufacturers and content producers and distributors to enable the delivery and viewing of 3D content. RealD’s cutting-edge 3D technologies have been used for applications such as piloting the Mars Rover.
RealD was founded in 2003 and has offices in Beverly Hills, California; Boulder, Colorado; London, United Kingdom; and Tokyo, Japan. For more information, please visit our website at www.reald.com.
© 2010 RealD Inc. All Rights Reserved.
Contact:
Addo Communications
Andrew Greenebaum / Laura Foster
310-829-5400
andrewg@addocommunications.com; lauraf@addocommunications.com
RealD Inc.
Consolidated Statement of Operations
(In thousands, except share and per share amounts)
(Unaudited)
|
| Three Months Ended |
| ||||
|
| June 25, |
| June 26, |
| ||
|
| 2010 |
| 2009 |
| ||
|
|
|
|
|
| ||
Revenue: |
|
|
|
|
| ||
Licensing |
| $ | 25,728 |
| $ | 5,954 |
|
Product and other |
| 38,792 |
| 19,610 |
| ||
Total revenue |
| 64,520 |
| 25,564 |
| ||
Cost of revenue: |
|
|
|
|
| ||
Licensing |
| 2,995 |
| 2,286 |
| ||
Product and other |
| 43,623 |
| 20,415 |
| ||
Total cost of revenue |
| 46,618 |
| 22,701 |
| ||
Gross margin |
| 17,902 |
| 2,863 |
| ||
Operating expenses: |
|
|
|
|
| ||
Research and development |
| 2,979 |
| 2,400 |
| ||
Selling and marketing |
| 4,105 |
| 3,902 |
| ||
General and administrative |
| 6,230 |
| 2,731 |
| ||
Total operating expenses |
| 13,314 |
| 9,033 |
| ||
Operating income (loss) |
| 4,588 |
| (6,170 | ) | ||
Interest expense |
| (519 | ) | (282 | ) | ||
Other income (loss) |
| 6,610 |
| (10 | ) | ||
Income (loss) before income taxes |
| 10,679 |
| (6,462 | ) | ||
Income tax expense |
| 827 |
| 527 |
| ||
Net income (loss) |
| 9,852 |
| (6,989 | ) | ||
Net (income) loss attributable to noncontrolling interest |
| (1,060 | ) | 237 |
| ||
Accretion of preferred stock |
| (3,838 | ) | (3,092 | ) | ||
Undistributed earnings attributable to preferred stockholders |
| (2,008 | ) | - |
| ||
Net income (loss) attributable to RealD Inc. common stockholders |
| $ | 2,946 |
| $ | (9,844 | ) |
|
|
|
|
|
| ||
Earnings (loss) per common share: |
|
|
|
|
| ||
Basic |
| $ | 0.12 |
| $ | (0.41 | ) |
Diluted |
| $ | 0.09 |
| $ | (0.41 | ) |
|
|
|
|
|
| ||
Shares used in computing earnings per common share: |
|
|
|
|
| ||
Basic |
| 24,690,954 |
| 24,201,394 |
| ||
Diluted |
| 31,072,835 |
| 24,201,394 |
| ||
|
|
|
|
|
|
RealD Inc.
Consolidated Balance Sheets
(In thousands)
|
| June 25, |
| March 26, |
| ||
|
| 2010 |
| 2010 |
| ||
|
| (unaudited) |
|
|
| ||
Assets |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 19,549 |
| $ | 13,134 |
|
Accounts receivable, net |
| 50,853 |
| 51,184 |
| ||
Inventories |
| `11,467 |
| 6,539 |
| ||
Deferred costs – eyewear |
| 2,407 |
| 1,842 |
| ||
Deferred income taxes |
| 4,349 |
| 4,349 |
| ||
Prepaid expenses and other current assets |
| 3,093 |
| 1,128 |
| ||
Total current assets |
| 91,718 |
| 78,176 |
| ||
Property and equipment, net |
| 3,074 |
| 2,558 |
| ||
Cinema systems, net |
| 53,022 |
| 40,623 |
| ||
Digital projectors, net-held for sale |
| 11,607 |
| 25,521 |
| ||
Goodwill |
| 10,657 |
| 10,657 |
| ||
Other intangibles, net |
| 2,016 |
| 2,024 |
| ||
Other assets |
| 6,430 |
| 2,587 |
| ||
Total assets |
| $ | 178,524 |
| $ | 162,146 |
|
Liabilities, redeemable convertible preferred stock and equity (deficit) |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
| $ | 38,371 |
| $ | 37,625 |
|
Accrued expenses |
| 26,409 |
| 24,608 |
| ||
Deferred revenue |
| 29,383 |
| 19,430 |
| ||
Credit facility agreement |
| 25,106 |
| 20,066 |
| ||
Income taxes payable |
| 1,269 |
| 1,254 |
| ||
Current portion of long-term debt |
| 2,963 |
| 9,299 |
| ||
Total current liabilities |
| 123,501 |
| 112,282 |
| ||
Deferred revenue, net of current portion |
| 13,902 |
| 14,144 |
| ||
Virtual print fee liability and customer deposits |
| 4,172 |
| 8,331 |
| ||
Long-term debt, net of current portion |
| 1,479 |
| 2,031 |
| ||
Deferred tax liability |
| 4,413 |
| 4,413 |
| ||
Commitments and contingencies |
|
|
|
|
| ||
Series C mandatorily redeemable convertible preferred stock, |
| 66,669 |
| 62,831 |
| ||
Equity (deficit) |
|
|
|
|
| ||
Series A redeemable convertible preferred stock |
| 1,978 |
| 1,978 |
| ||
Series B redeemable convertible preferred stock |
| 2,970 |
| 2,970 |
| ||
Series D redeemable convertible preferred stock |
| 19,952 |
| 19,952 |
| ||
Common stock |
| 69,519 |
| 68,371 |
| ||
Accumulated deficit |
| (132,337 | ) | (137,291 | ) | ||
Total RealD Inc. stockholders’ deficit |
| (37,918 | ) | (44,020 | ) | ||
Noncontrolling interest |
| 2,306 |
| 2,134 |
| ||
Total equity (deficit) |
| (35,612 | ) | (41,886 | ) | ||
Total liabilities, mandatorily redeemable convertible preferred stock and equity (deficit) |
| $ | 178,524 |
| $ | 162,146 |
|
RealD Inc.
Schedule of Non-GAAP Reconciliations
(In thousands)
(Unaudited)
|
| Three Months Ended |
| ||||
|
| June 25, |
| June 26, |
| ||
|
| 2010 |
| 2009 |
| ||
|
|
|
|
|
| ||
Net income (loss) |
| $ | 9,852 |
| $ | (6,989) |
|
Add (deduct): |
|
|
|
|
| ||
Interest expense |
| 519 |
| 282 |
| ||
Income tax expense |
| 827 |
| 527 |
| ||
Depreciation and amortization |
| 2,668 |
| 1,612 |
| ||
Other (income) loss (1) |
| (6,610) |
| 10 |
| ||
Share-based compensation expense (2) |
| 656 |
| 764 |
| ||
Exhibitor option expense (3) |
| 492 |
| 5,078 |
| ||
Impairment of assets and intangibles (4) |
| 131 |
| 48 |
| ||
Sales and use tax (5) |
| 2,145 |
| 720 |
| ||
Property tax (6) |
| 206 |
| 112 |
| ||
Management fee (7) |
| 88 |
| 88 |
| ||
Adjusted EBITDA |
| $ | 10,974 |
| $ | 2,252 |
|
(1) Includes amortization of debt issue costs, unrealized foreign currency exchange gains and losses and gain of $6.7 million from the sale of digital projectors.
(2) Represents share based compensation expense of nonstatutory and incentive stock options to employees, officers, directors and consultants.
(3) Represents stock options granted to some of our motion picture exhibitor licensees. The amounts are recorded as contra revenue in the condensed consolidated financial statements.
(4) Represents impairment of long-lived assets, such as fixed assets, theatrical equipment and identifiable intangibles.
(5) Represents taxes incurred by us for cinema license and product revenue.
(6) Represents property taxes on RealD Cinema Systems and digital projectors.
(7) Represents payment of management fees to our Series C mandatorily redeemable convertible preferred stockholder (included in general and administrative expense, which will terminate upon the completion of our initial public offering).