Cinedigm Announces Fourth Quarter and Full Year Fiscal 2013 Financial Results

Cinedigm Announces Fourth Quarter and Full Year Fiscal 2013 Financial Results

Fourth Quarter Revenues Up 21% and Full Year Revenues Up 15%

LOS ANGELES--(BUSINESS WIRE)-- Cinedigm Digital Cinema Corp. (NAS: CIDM) today announced financial results for the fourth quarter and full year fiscal 2013 which ended March 31, 2013.


Highlights Include:

  • Fourth quarter revenues up 21% to $21.4 million from $17.7 million in the year ago quarter
  • Full year consolidated revenues increased 15% to $88.1 million from the prior year
  • Fourth quarter non-deployment revenues increased 91% to $8.3 million, inclusive of the New Video acquisition, from $4.4 million in the year ago quarter and 20% pro-forma for New Video in both periods
  • Full year non-deployment revenues increased 58% to $36.0 million from the prior year
  • Full year non-deployment adjusted EBITDA was $5.1 million, including significant growth investments and upfront expenses from the movie releasing business
  • During the fiscal year, Cinedigm successfully refinanced all existing debt into a non-recourse facility, closing a $125 million senior non-recourse credit facility led by Société Générale and a $70 million non-recourse credit facility provided by Prospect Capital
  • Domestic screen deployment is now virtually complete with 11,703 screens installed across 267 exhibitors
  • 17 independent films acquired to date, 5 released in FY13 and 5 more released to date in the first quarter of FY14, representing a strong and growing pipeline that will enhance the Company's results going forward
  • The Company significantly outperformed the industry averages during the fiscal year with 55% growth in digital revenues, and 65% growth in physical product sales compared to industry growth of 27% and (6%) respectively (industry source: Digital Entertainment Group)

"It was just over two years ago that we outlined our strategy to transform Cinedigm to capitalize on the digital distribution revolution that is changing the entire entertainment business. Today, we are fully executing against that strategic plan in all areas," said Chris McGurk, Chairman and CEO. "Our digital cinema services group continues to manage our 11,700 strong screen deployment while our Software group is launching key new products and expanding our markets. We dramatically improved our balance sheet with a non-recourse debt refinancing that significantly reduced our cost of capital and extended our debt maturities. And, most importantly, the digital revolution has triggered opportunities for success in our entertainment group that are even greater than we previously anticipated. New platforms, distribution outlets and viewing devices are driving an ever-increasing demand by consumers to view our new releases and our vast and expanding library of digital content. We are moving aggressively to take advantage of this sea change in consumer viewing behavior."

"We have consistently stated that fiscal year 2013 was a year focused on both investment and growth," added Adam Mizel, Chief Operating Officer and CFO. "We made solid progress as we acquired 17 movies, added 1,200 projects to our distribution library of now over 20,000 movies and television episodes, and rebuilt our software management team while completing two major software product upgrades. We accomplished all this while growing non-deployment revenues 58% inclusive of our New Video acquisition, and maintaining solid positive EBITDA even after investments in our infrastructure and the 'J-curve' impacts of the ramp of our content releasing strategy. Looking forward, we expect Fiscal 2014 to be a similar year of investment and growth, as we take advantage of emerging global opportunities in each of our business lines. We will do this while maintaining the financial and operational discipline necessary to continue to drive towards net profitability."

Fourth Quarter Fiscal 2013 Results

Revenues for the fourth quarter were $21.4 million, a 21% increase from $17.7 million in the year ago quarter. Adjusted EBITDA from continuing operations for the quarter was $13.5 million, a 6% increase from $12.7 million in the year ago period. Non-deployment revenues for the fourth quarter were $8.3 million, a 91% increase from $4.4 million in the year ago period. Adjusted EBITDA from non-deployment operations for the quarter was $0.9 million, up from $0.2 million in year ago period reflecting revenue growth from the New Video acquisition partially offset by upfront releasing expenses for movies of $0.5 million. After adjusting for non-recurring items such as the write-off of previously capitalized debt issuance costs, debt prepayment fees, restructuring and merger and acquisition expenses, fourth quarter loss from continuing operations was $4.7 million or $0.10 per share, versus a loss of $4.5 million, or $0.12 per share in the prior year period.

Full Year Fiscal 2013 Results

Revenues for fiscal 2013 were $88.1 million, a 15% increase from $76.6 million in fiscal 2012 while Non-deployment revenues grew 58% to $36.0 million from the prior fiscal year. The increase in revenues was primarily the result of solid performance in Cinedigm Entertainment Group (CEG), including results from the New Video acquisition, more than offsetting decreases in Deployment and Services revenues. The decreases in deployment and services are due to (i) a reduction in VPF revenues and EBITDA in the fiscal year both by approximately $2.0 million as major studios shifted their release schedules during the summer of 2012 due to the Summer Olympics and the Aurora movie theatre shootings; and, (ii) the delayed delivery and customer product acceptance related to over $2.0 million in software revenues as the completion of the Distributor product upgrade moved into fiscal year 2014.

For full year fiscal 2013, Adjusted EBITDA from continuing operations totaled $55.6 million, as compared to $58.0 million in the prior year. Excluding Cinedigm's VPF business units, Adjusted EBITDA from non-deployment businesses was $5.1 million during the fiscal year ended March 31, 2013, as compared to $5.7 million in the fiscal year ended March 31, 2012, reflecting ongoing investment as Cinedigm ramps up its content and software growth engines. The decline in EBITDA was primarily driven by (i) upfront releasing expenses associated with scaling up movie and library acquisitions; (ii) growth of our content acquisition, theatrical marketing and operations teams to support our expanded acquisitions and slate of releases; (iii) additional investment in software new product development; and (iv) decrease in Services revenue due to the software revenue recognition timing and studio schedule shifts referenced earlier.

Consolidated loss from continuing operations was $20.6 million or $0.44 per share for the full year, compared to a consolidated loss from continuing operations of $14.0 million or $0.39 per share in the comparable prior year. However, after adjusting for non-recurring items, primarily the write-off of previously capitalized debt issuance costs, debt prepayment fees, restructuring and merger and acquisition expenses, the consolidated loss from continuing operations was $7.3 million, or $0.15 per share, compared to $12.2 million, or $0.34 per share in the prior year.

Adjusted EBITDA is defined by the Company for the periods presented to be earnings before interest, taxes, depreciation and amortization, other income, net, stock-based expenses and compensation, merger and acquisition costs, and certain other 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). Adjusted EBITDA is not a measurement of financial performance under accounting principles generally accepted in the United States of America and may not be comparable to other similarly titled measures of other companies. 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. Management presents adjusted EBITDA because it believes that adjusted EBITDA is a useful supplement to net loss as an indicator of operating performance. Management also believes that adjusted EBITDA is an industry-wide financial measure that is useful both to management and investors when evaluating the Company's performance and comparing our performance with the performance of our competitors. Management also uses adjusted EBITDA for planning purposes, as well as to evaluate the Company's performance because it believes that adjusted EBITDA more accurately reflects the Company's results, as it excludes certain items, such as stock-based compensation charges, that management believes are not indicative of the Company's operating performance. The Company believes that adjusted EBITDA is a performance measure and not a liquidity measure. Adjusted EBITDA should not be considered as an alternative to operating or net loss as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of cash flows, in each case as determined in accordance with accounting principles generally accepted in the United States of America, or as a measure of liquidity. In addition, EBITDA does not take into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows. 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.

Conference Call

Cinedigm will host a conference call to discuss its financial results at 4:30 p.m. EDT on June 19, 2013. To participate in the conference call, please dial (877) 754-5303or for international callers (678) 894-3030at least five minutes prior to the start of the call. No passcode is required. An audio webcast of the call will be accessible at http://investor.cinedigm.com/events.cfm. To listen to the live webcast, please visit the site prior to the start of the call in order to register, download and install any necessary audio software.

For those unable to participate during the live broadcast, a replay will be available beginning June 19, 2013 at 5:30 p.m. EDT, through June 26, 2013 at 11:59 p.m. EDT. To access the replay, dial (800) 585-8367 (U.S.) or (404) 537-3406 (International) and use passcode: 95083673.

About Cinedigm

Cinedigm is a leader in the digital entertainment revolution. Cinedigm's pioneering digital cinema deployment and servicing efforts, and our state-of-the-art distribution and exhibition software, are cornerstones of the digital cinema transformation. Cinedigm is also the leading digital aggregator of independent content in the world, providing end-to-end digital content delivery to theaters, across digital and on-demand platforms, and on DVD/Blu-ray. Through partnerships with iTunes, Netflix, Amazon, Google, Hulu, Vudu, Xbox, Playstation, and others, Cinedigm reaches a global digital audience. The company's library of over 5,000 titles includes award-winning documentaries from Docurama Films®, next-gen indies from Flatiron Film Company® and acclaimed independent films and festival picks through partnerships with the Sundance Institute and Tribeca Film. CEG is proud to distribute many Oscar®-nominated films including THE INVISIBLE WAR, HELL AND BACK AGAIN, GASLAND, WASTE LAND and PARADISE LOST 3: PURGATORY.

Current and upcoming CEG releases include Destin Daniel Cretton's SHORT TERM 12, Penny Lane's OUR NIXON, Shaul Schwarz's NARCO CULTURA, Jared Moshe's DEAD MAN'S BURDEN, Geoffrey Fletcher's VIOLET & DAISY, Malika Zouhali-Worrall and Katherine Fairfax Wright's CALL ME KUCHU and Jimmy Loweree's ABSENCE.

Cinedigm™ and Cinedigm Digital Cinema Corp™ are trademarks of Cinedigm Digital Cinema Corp www.cinedigm.com. [CIDM-F]

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.

CINEDIGM DIGITAL CINEMA CORP.
CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data)

 
    March 31,
2013    2012
ASSETS
Current assets
Cash and cash equivalents$13,448$17,843
Restricted available-for-sale investments9,477
Accounts receivable, net31,69524,502
Deferred costs, current portion1,2382,228
Unbilled revenue, current portion9,9897,510
Prepaid and other current assets6,1011,121
Note receivable, current portion331498
Assets held for sale 214
Total current assets62,80263,393
Restricted cash6,7515,751
Security deposits218207
Property and equipment, net170,511200,974
Intangible assets, net12,848466
Capitalized software costs, net7,0835,156
Goodwill12,7395,765
Deferred costs, net of current portion7,3965,080
Unbilled revenue, net of current portion543617
Accounts receivable, long-term1,225773
Note receivable, net of current portion130465
Investment in non-consolidated entity, net1,812 1,490
Total assets$284,058 $290,137
 
 
CINEDIGM DIGITAL CINEMA CORP.
CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data)

(continued)

    
March 31,
2013    2012
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued expenses$40,320$20,854
Current portion of notes payable, non-recourse34,44735,644
Current portion of capital leases132186
Current portion of deferred revenue3,9003,677
Current portion of contingent consideration for business combination1,500
Liabilities as part of assets held for sale 75 
Total current liabilities80,29960,436
Notes payable, non-recourse, net of current portion203,462135,345
Notes payable87,354
Capital leases, net of current portion4,3865,244
Interest rate derivatives5441,771
Deferred revenue, net of current portion10,93111,451
Contingent consideration, net of current portion1,750
Customer security deposits, net of current portion 9 
Total liabilities301,372 301,610 
Commitments and contingencies
Stockholders' Deficit

Preferred stock, 15,000,000 shares authorized; Series A 10% - $0.001 par value per share; 20 shares authorized; 7 shares issued and outstanding at March 31, 2013 and 2012, respectively. Liquidation preference of $3,590

3,4663,357
Class A common stock, $0.001 par value per share; 118,759,000 and 75,000,000 shares authorized; 48,448,137 and 37,722,927 shares issued and 48,396,697 and 37,671,487 shares outstanding at March 31, 2013 and 2012, respectively4838
Class B common stock, $0.001 par value per share; 1,241,000 and 15,000,000 shares authorized; 1,241,000 and 1,241,000 shares issued and 0 and 25,000 shares outstanding, at March 31, 2013 and 2012, respectively
Additional paid-in capital221,810206,348
Treasury stock, at cost; 51,440 Class A shares(172)(172)
Accumulated deficit(242,466)(221,044)
Total stockholders' deficit(17,314)(11,473)
Total liabilities and stockholders' deficit$284,058 $290,137 
 
 
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CINEDIGM DIGITAL CINEMA CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for share and per share data)

 
  

For the Three Months
Ended March 31,

  

For the Fiscal Year
Ended March 31,

2013  20122013  2012
Revenues$21,355$17,695$88,080$76,557
Costs and expenses:
Direct operating (exclusive of depreciation and amortization shown below)3,9571,64812,4897,042
Selling, general and administrative4,6593,93323,12315,717
Provision for doubtful accounts264459490459
Research and development3213144175
Merger and acquisition expenses6041,267604
Restructuring expenses3753401,207
Depreciation and amortization of property and equipment9,1269,14636,49835,865
Amortization of intangible assets445 41 1,565 294 
Total operating expenses18,483 16,219 75,916 61,363 
Income from operations2,8721,47612,16415,194
Interest income284448140
Debt prepayment fees(3,725)(3,725)
Loss on extinguishment of notes payable(7,905)(7,905)
Interest expense(6,870)(7,356)(28,314)(29,899)
(Loss) income on investment in non-consolidated entity(1,018)(167)322(510)
Other income, net159306653912
Change in fair value of interest rate derivatives206 171 1,231 200 
Loss from continuing operations before benefit from income taxes(16,253)(5,526)(25,526)(13,963)