February 11, 2010

Cinedigm Digital Cinema Corp. Announces Fiscal Year 2010 Third Quarter Results

Commitment for $100 Million Credit Facility Creates Platform for Growth: Phase 2 Gains Momentum

MORRISTOWN, NJ, Feb 11, 2010 (MARKETWIRE via COMTEX News Network) -- Cinedigm Digital Cinema Corp. ("Cinedigm" or the "Company") (NASDAQ: CIDM) reported a 9.5% sequential quarterly increase in revenues to $21.8 million in its seasonally strong fiscal 2010 third quarter ending December 31, 2009. Revenues declined 4% versus the year-ago period. The Company posted Adjusted EBITDA(1) (defined below) of $11.0 million, sequentially increasing 13.8% from $9.7 million in the second quarter. Adjusted EBITDA in the quarter was flat versus the year-ago period Adjusted EBITDA. The net loss in the third quarter of $6.4 million or $0.23 per share includes various non-cash items aggregating to $8.6 million or $0.30 per share, compared to similar items of $22.3 million or $0.81 per share in the year-ago period. The Company ended the fiscal 2010 third quarter with $12.1 million of unrestricted cash (excluding $16.4 million of restricted cash and investments) on its balance sheet.

THIRD QUARTER HIGHLIGHTS

--  Revenues for the fiscal year 2010 third quarter were $21.8 million
    compared to $22.7 million in the year-ago period. The 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 lower advertising revenues. Partially
    offsetting these declines were Phase 2-related digital cinema services
    fees and a 12% increase in Content and Entertainment Segment revenues,
    which were driven by content distribution fees.
--  Adjusted EBITDA in the third quarter was $11.0 million, an even match
    to the year-ago period.  The flat Adjusted EBITDA as compared to the
    previous year, despite a 4% decline in total revenues and a decline in
    Phase 1 VPF revenues, is primarily the result of positive Adjusted
    EBITDA from the Content and Entertainment Group and careful expense
    management.
--  Signed commitment letters for a $100 million non-recourse Phase 2
    credit facility with GE Capital and Societe Generale.
--  Signed Virtual Print Fee agreements for Phase 2 with Warner Bros. and
    Overture Films bringing the total to eight studios signed on to the
    Phase 2 plan.
--  Signed first Exhibitor-Buyer Phase 2 Master License Agreement using
    National Association of Theatre Owners ("NATO") - Cinema Buying
    Group contract.

Bud Mayo, Chief Executive Officer of Cinedigm, stated, "The third quarter saw Cinedigm take advantage of its strengthened balance sheet. At the end of October, we signed commitment letters for a $100 million non-recourse Phase 2 credit facility with GE Capital and Societe Generale. 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. As we finalize consents and amendments to our Phase 2 studio contracts and as we continue to sign Phase 2 exhibitor agreements, we are targeting a spring closing of this facility. In addition, the runaway success of Avatar has heightened excitement about 3-D cinema and increased the already robust 3-D release pipeline. This has further increased exhibitor demand for digital cinema as well as expanded our alternative content pipeline. We look forward to capitalizing on this enthusiasm in the months ahead."

PHASE 2 UPDATE

Mayo added, "The completion of the NATO Cinema Buying Group Exhibitor-Buyer contract was a hallmark event this quarter and the culmination of more than a year of work. R/C Theatres, with its 68 screens, is the first CBG member to use this contract and we have built a pipeline of 3,500 other screens interested in Phase 2 participation. We also installed screens at our first exhibitor-buyer customers in the quarter and have established a new financing approach for exhibitors to own and deploy digital cinema equipment. Cinedigm signed Phase 2 VPF agreements with Warner Bros. and Overture Films and now has VPF agreements with 8 studios. To date we have installed 237 Phase 2 screens and almost 4,000 screens in total."

CORPORATE UPDATE

Mayo concluded, "While significant work remains ahead, the third quarter was one of great progress. In addition to the Phase 2 accomplishments, our Entertainment Group distributed its second independent film, "OPA!", and 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. Finally, we are also growing our content delivery business as we added several new trailer delivery customers and laid plans to expand our satellite network with proceeds from our financing."

CONFERENCE CALL NOTIFICATION

Cinedigm will host a conference call to discuss its financial results at 9:00 a.m. Eastern on Thursday, February 11, 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 3783693. The replay will be accessible through Thursday, February 18th.

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(R) 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. 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.

(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.

                   CINEDIGM DIGITAL CINEMA CORP.
                CONSOLIDATED STATEMENTS OF OPERATIONS
         (In thousands, except for share and per share data)
                             (Unaudited)
                                                    Three Months Ended
                                                        December 31,
                                                  ------------------------
                                                     2008         2009
                                                  -----------  -----------
Revenues                                          $    22,710  $    21,769
Costs and expenses:
Direct operating (exclusive of depreciation and
 amortization shown below)                              7,068        6,585
Selling, general and administrative                     4,691        4,158
Provision for doubtful accounts                            98          144
Research and development                                  107           47
Stock-based compensation                                  295          346
Impairment of goodwill                                  6,525            -
Depreciation and amortization of property and
 equipment                                              8,126        8,286
Amortization of intangible assets                         821          740
                                                  -----------  -----------
    Total operating expenses                           27,731       20,306
                                                  -----------  -----------
Income from operations                                 (5,021)       1,463
Interest income                                            88          101
Interest expense                                       (6,935)      (9,261)
Other expense, net                                       (162)        (153)
Change in fair value of interest rate
 swap                                                  (5,411)         853
Change in fair value of warrants                            -          613
                                                  -----------  -----------
Net loss                                              (17,441)      (6,384)
Preferred stock dividends                                   -         (100)
                                                  -----------  -----------
Net loss attributable to shareholders             $   (17,441) $    (6,484)
                                                  ===========  ===========
Net loss per Class A and B common share - basic
 and diluted                                      $     (0.63) $     (0.23)
                                                  ===========  ===========
Weighted average number of Class A and B common
 shares outstanding:
Basic and diluted                                  27,566,462   28,766,686
                                                  ===========  ===========
                    Cinedigm Digital Cinema Corp.
                    Adjusted EBITDA (as defined)
                 Reconciliation to GAAP Net Income
                          (In thousands)
                            (Unaudited)
                                                    Three Months Ended
                                                        December 31,
                                                  ------------------------
                                                     2008         2009
                                                  -----------  -----------
Net loss                                          $   (17,441) $    (6,384)
Add Back:
  Amortization of software development                    214          163
  Depreciation and amortization of property and
   equipment                                            8,126        8,286
  Amortization of intangible assets                       821          740
  Interest income                                         (88)        (101)
  Interest expense                                      6,935        9,261
  Other expense, net                                      162          153
  Impairment of goodwill                                6,525            -
  Change in fair value of interest rate swap            5,411         (853)
  Change in fair value of warrants                          -         (613)
  Stock-based expenses                                     37            -
  Stock-based compensation                                295          346
                                                  -----------  -----------
Adjusted EBITDA (as defined)                      $    10,997  $    10,998
                                                  ===========  ===========
                   CINEDIGM DIGITAL CINEMA CORP.
                CONSOLIDATED STATEMENTS OF OPERATIONS
          (In thousands, except for share and per share data)
                              (Unaudited)
                                                     Nine Months Ended
                                                        December 31,
                                                  ------------------------
                                                      2008         2009
                                                  -----------  -----------
Revenues                                          $    65,129  $    60,316
Costs and expenses:
Direct operating (exclusive of depreciation and
 amortization shown below)                             19,597       18,113
Selling, general and administrative                    13,711       12,100
Provision for doubtful accounts                           271          408
Research and development                                  207          151
Stock-based compensation                                  653        1,112
Impairment of goodwill                                  6,525            -
Depreciation and amortization of property and
 equipment                                             24,394       24,762
Amortization of intangible assets                       2,669        2,255
                                                  -----------  -----------
    Total operating expenses                           68,027       58,901
                                                  -----------  -----------
Income (loss) from operations                          (2,898)       1,415
Interest income                                           311          236
Interest expense                                      (21,101)     (25,602)
Other expense, net                                       (488)        (454)
Gain on extinguishment of debt                              -       10,744
Change in fair value of interest rate swap             (3,846)       2,076
Change in fair value of warrants                            -       (2,963)
                                                  -----------  -----------
Net loss                                              (28,022)     (14,548)
Preferred stock dividends                                   -         (300)
                                                  -----------  -----------
Net loss attributable to shareholders             $   (28,022) $   (14,848)
                                                  ===========  ===========
Net loss per Class A and B common share - basic
 and diluted                                      $     (1.03) $     (0.52)
                                                  ===========  ===========
Weighted average number of Class A and B common
 shares outstanding:
Basic and diluted                                  27,324,324   28,572,727
                                                  ===========  ===========
                       Cinedigm Digital Cinema Corp.
                       Adjusted EBITDA (as defined)
                     Reconciliation to GAAP Net Income
                             (In thousands)
                               (Unaudited)
                                                     Nine Months Ended
                                                        December 31,
                                                  ------------------------
                                                     2008         2009
                                                  -----------  -----------
Net loss                                          $   (28,022) $   (14,548)
Add Back:
  Amortization of software development                    601          486
  Depreciation and amortization of property and
   equipment                                           24,394       24,762
  Amortization of intangible assets                     2,669        2,255
  Interest income                                        (311)        (236)
  Interest expense                                     21,101       25,602
  Other expense, net                                      488          454
  Extinguishment of debt                                    -      (10,744)
  Impairment of goodwill                                6,525            -
  Change in fair value of interest rate swap            3,846       (2,076)
  Change in fair value of warrants                          -        2,963
  Stock-based expenses                                    156            -
  Stock-based compensation                                653        1,112
                                                  -----------  -----------
Adjusted EBITDA (as defined)                      $    32,100  $    30,030
                                                  ===========  ===========
                      CINEDIGM DIGITAL CINEMA CORP.
                       CONSOLIDATED BALANCE SHEETS
                 (In thousands, except for share data)
                               (Unaudited)
                                                    March       December
                                                   31,2009       31,2009
                                                  -----------  -----------
                            ASSETS
Current assets
  Cash and cash equivalents                       $    26,329  $    12,118
  Restricted available-for-sale investments                 -        5,764
  Accounts receivable, net                             13,884       13,073
  Deferred costs                                        3,936        3,013
  Unbilled revenue, current portion                     3,082        5,061
  Prepaid and other current assets                      1,798        1,856
  Notes receivable, current portion                       616          165
                                                  -----------  -----------
Total current assets                                   49,645       41,050
  Restricted available-for-sale investments                 -        3,492
  Restricted cash                                         255        7,164
  Security deposits                                       424          427
  Property and equipment, net                         243,124      228,037
  Intangible assets, net                               10,707        8,452
  Capitalized software costs, net                       3,653        3,803
  Goodwill                                              8,024        8,024
  Deferred costs                                        3,967        7,295
  Unbilled revenue, net of current portion              1,253          966
  Notes receivable, net of current portion                959          843
  Accounts receivable, net of current portion             386          386
                                                  -----------  -----------
Total assets                                      $   322,397  $   309,939
                                                  ===========  ===========
         LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Accounts payable and accrued expenses           $    14,954  $     7,333
  Current portion of notes payable, non-recourse       24,824       25,791
  Current portion of notes payable                        424          181
  Current portion of deferred revenue                   5,535        4,916
  Current portion of customer security deposits           314          104
  Current portion of capital leases                       175          499
                                                  -----------  -----------
Total current liabilities                              46,226       38,824
  Notes payable, non-recourse, net of current
   portion                                            170,624      153,637
  Notes payable, net of current portion                55,333       67,633
  Capital leases, net of current portion                5,832        5,721
  Warrant liability                                         -       13,695
  Fair value of interest rate swap                      4,529        2,453
  Deferred revenue, net of current portion              1,057        1,976
  Customer security deposits, net of current
   portion                                                  9            9
                                                  -----------  -----------
Total liabilities                                     283,610      283,948
                                                  -----------  -----------
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 December 31, 2009, respectively.
   Liquidation preference $4,050                        3,476        3,556
  Class A common stock, $0.001 par value per
   share; 65,000,000 and 75,000,000 shares
   authorized at March 31, 2009 and December 31,
   2009, respectively; 27,544,315 and 28,084,315
   shares issued and 27,492,875 and 28,032,875
   shares outstanding at March 31, 2009 and
   December 31, 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 December 31, 2009, respectively                 1            1
  Additional paid-in capital                          173,565      175,596
  Treasury Stock, at cost; 51,440 Class A shares         (172)        (172)
  Accumulated deficit                                (138,110)    (152,958)
  Accumulated other comprehensive loss                      -          (60)
                                                  -----------  -----------
Total stockholders' equity                             38,787       25,991
                                                  -----------  -----------
                                                  $   322,397  $   309,939
                                                  ===========  ===========

Contact:
Adam M. Mizel
Cinedigm Digital Cinema Corp.
(973) 290.0080
Email Contact


SOURCE: Cinedigm Digital Cinema Corp.

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