August 11, 2011

Cinedigm Digital Cinema Corp. Announces Strong First Quarter Financial and Operating Results

Revenue and Adjusted EBITDA Increase 21% and 25%, Respectively

MORRISTOWN, NJ and LOS ANGELES, CA -- (MARKET WIRE) -- 08/11/11 -- Cinedigm Digital Cinema Corp. (NASDAQ: CIDM), the global leader in the digital cinema industry, reported strong financial results for the first quarter ended June 30, 2011. The Company also made significant operational progress with its strategic initiatives.

Total revenues in the first quarter were $23.5 million, representing a 21.4% increase from the prior year's first quarter. The increased revenues are a result of continued growth in Phase 2 deployments, and significantly higher revenues from the Company's Software and Services businesses.

The Company reported Adjusted EBITDA(1) (defined below) of $13.2 million, an increase of 24.9% from the $10.5 million reported in the prior year's first quarter. Adjusted EBITDA exclusive of Phase I/Phase II programs was $324,000, marking the third consecutive quarter of positive Adjusted EBITDA and a significant improvement as compared to the loss of $(470,000) reported in the prior year's first quarter. Net loss in the first quarter was $(6.4) million or $(0.20) per share, as compared to a loss of $(7.1) million or $(0.24) per share in the prior year period.

"We are pleased with our strong start to the year, which marks the achievement of several significant operational and financial milestones," said Chris McGurk, Chairman and CEO of Cinedigm. "Since early 2011, we have recalibrated the company's focus, directing our resources to areas where we can most effectively leverage the capabilities of the digital cinema platform and be a market leader, specifically in software and content marketing and distribution. Our strong first quarter performance clearly indicates that our efforts are paying off strategically, operationally and financially."

Adam M. Mizel, Chief Strategy and Financial Officer, commented, "From a financial perspective, Cinedigm had a very solid first quarter. Our core businesses continued to expand and benefit from the positive operating leverage inherent in our business model, as evidenced by an almost $800,000 improvement in Adjusted EBITDA excluding our deployment subsidiaries. In addition, during the quarter, 634 new Cinedigm Phase II digital systems were deployed, resulting in 2,829 Phase II digital systems deployed at the end of this quarter. We also enter the back half of the year with a strong deployment backlog of 2,625 systems to be installed. Importantly, we expect continued strong financial results as exhibitors accelerate digital conversions in advance of the late 2012 installation deadline to benefit from the virtual print fee program.

"As we have consistently noted, each one thousand screens deployed will add $2.0-$2.5 million of non-deployment EBITDA in the first twelve months through service fees and software license and maintenance fees," Mr. Mizel continued. "In addition, subsequent to the quarter end Cinedigm announced the completion of a $6.9 million private placement of common stock, with proceeds intended for general working capital and to pursue strategic opportunities in our content and software businesses. Finally, we were pleased to recently announce our intent to sell our non-core feature and trailer delivery business to Technicolor and form a strategic software partnership."

"Our entire management team is devoted to furthering Cinedigm's growth and profitability, with the ultimate objective of maximizing shareholder value," Mr. McGurk concluded. "We are pleased with the excellent start of the year and will continue to focus on the rapid deployment of digital cinema systems, the development of both exhibitor and distributor software solutions, as well as the expansion of our content marketing and distribution business, both through organic growth as well as accretive external opportunities."

About Cinedigm

Cinedigm is a leader in providing the services, experience, technology and content critical to transforming movie theatres into digital and networked entertainment centers. The Company partners 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, satellite and hard drive digital movie delivery network; pre-show in-theatre advertising services; and marketing and distribution platform for alternative content such as CineLive® 3D and 2D sports and concerts, thematic programming and independent movies is a cornerstone of the digital cinema transformation. Cinedigm™ and Cinedigm Digital Cinema Corp™ are trademarks of Cinedigm Digital Cinema Corp. www.cinedigm.com [CIDM-E]

(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 condensed consolidated financial statements prepared in accordance with U.S. GAAP.


                       CINEDIGM DIGITAL CINEMA CORP.

              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

                                (Unaudited)



                                                     For the Three Months

                                                            Ended

                                                           June 30,

                                                  -------------------------

                                                      2011          2010

                                                  -----------   -----------

Revenues                                          $    23,500   $    19,350

Costs and Expenses:

  Direct operating (exclusive of depreciation and

   amortization shown below)                            5,672         4,939

  Selling, general and administrative                   5,200         5,476

  Provision for doubtful accounts                          88           104

  Research and development                                 65            65

  Depreciation and amortization of property and

   equipment                                            9,492         8,161

  Amortization of intangible assets                       726           721

                                                  -----------   -----------

Total operating expenses                               21,243        19,466

                                                  -----------   -----------

Income (loss) from operations                           2,257          (116)



  Interest income                                          51            67

  Interest expense                                     (7,384)       (6,831)

  Loss on extinguishment of note payable                   --        (4,448)

  Other income (expense), net                              42          (151)

  Change in fair value of interest rate swaps            (787)         (458)

  Change in fair value of warrant liability                --         5,033

                                                  -----------   -----------

Net loss from continuing operations                    (5,821)       (6,904)



Loss from discontinued operations                        (572)         (155)

                                                  -----------   -----------

Net loss                                               (6,393)       (7,059)

Preferred stock dividends                                 (89)         (100)

Net loss attributable to common stockholders      $    (6,482)  $    (7,159)

                                                  ===========   -----------

Net loss per Class A and Class B common share -

 basic and diluted

  Loss from continuing operations                 $     (0.18)  $     (0.23)

  Loss from discontinued operations                     (0.02)        (0.01)

                                                  -----------   -----------

                                                  $     (0.20)  $     (0.24)

                                                  ===========   ===========

Weighted average number of Class A and Class B

 common shares outstanding: Basic and diluted      32,632,563    29,421,168

                                                  ===========   ===========







                       Cinedigm Digital Cinema Corp.

                        Adjusted EBITDA (as defined)

                     Reconciliation to GAAP Net Income

                               (In thousands)

                                (Unaudited)

                                                For the Three Months Ended

                                                         June 30,

                                              -----------------------------

                                                   2011            2010

                                              -------------   -------------

Net loss from continuing operations           $      (5,821)  $      (6,904)

Add Back:

  Amortization of software development                  212             175

  Depreciation and amortization of property

   and equipment                                      9,492           8,161

  Amortization of intangible assets                     726             721

  Interest income                                       (51)            (67)

  Interest expense                                    7,384           6,831

  Loss on extinguishment of note payable                 --           4,448

  Other expense, net                                    (42)            151

  Change in fair value of interest rate swaps           787             458

  Change in fair value of warrants                       --          (5,033)

  Stock-based compensation                              480             690

  Non-recurring CEO transition expenses                  --             912

                                              -------------   -------------

Adjusted EBITDA                               $      13,167   $      10,543

                                              =============   =============



Adjustments related to the Phase I and Phase

 II Deployments:

  Depreciation and amortization of property

   and equipment                                     (8,772)         (7,465)

  Amortization of intangible assets                     (13)            (12)

  Income from operations                             (5,425)         (4,558)

  Intersegment services fees earned (1)               1,367           1,022

                                              -------------   -------------

Adjusted EBITDA from non-deployment Phase I

 and Phase II businesses                      $         324   $        (470)

                                              =============   =============

(1) Intersegment revenues of the Services segment represent service fees

earned from the Phase I and Phase II Deployments.







                        CINEDIGM DIGITAL CINEMA CORP.

                    CONDENSED CONSOLIDATED BALANCE SHEETS

                    (In thousands, except for share data)



                                                                 March 31,

                                                June 30, 2011       2011

                                                -------------  -------------

ASSETS                                           (Unaudited)

Current assets

  Cash and cash equivalents                     $      11,443  $      10,748

  Restricted available-for-sale investments             4,987          6,480

  Accounts receivable, net                             22,125         19,701

  Deferred costs, current portion                       2,677          2,720

  Unbilled revenue, current portion                     6,488          6,939

  Prepaid and other current assets                      1,319          1,179

  Note receivable, current portion                        587            445

  Assets held for sale                                     --          4,593

                                                -------------  -------------

Total current assets                                   49,626         52,805



  Restricted cash                                       5,753          5,751

  Security deposits                                       217            178

  Property and equipment, net                         222,513        224,496

  Intangible assets, net                                4,157          4,873

  Capitalized software costs, net                       3,627          3,767

  Goodwill                                              5,874          5,874

  Deferred costs, net of current portion                7,177          7,570

  Unbilled revenue, net of current portion                754            834

  Note receivable, net of current portion               1,136          1,296

  Accounts receivable, net of current portion              67             44

                                                -------------  -------------

Total assets                                    $     300,901  $     307,488

                                                =============  =============







                       CINEDIGM DIGITAL CINEMA CORP.

                   CONDENSED CONSOLIDATED BALANCE SHEETS

                   (In thousands, except for share data)

                                (continued)



                                                    June 30,     March 31,

                                                      2011          2011

                                                  -----------   -----------

LIABILITIES AND STOCKHOLDERS' EQUITY              (Unaudited)

Current liabilities

  Accounts payable and accrued expenses           $    10,535   $    10,232

  Current portion of notes payable, non-recourse       30,308        28,483

  Current portion of notes payable                         97           142

  Current portion of capital leases                       197            43

  Current portion of deferred revenue                   7,074         6,687

  Current portion of customer security deposits            60            60

  Liabilities as part of held for sale assets              --         6,022

                                                  -----------   -----------

Total current liabilities                              48,271        51,669

  Notes payable, non-recourse, net of current

   portion                                            158,113       164,071

  Notes payable, net of current portion                80,414        78,175

  Capital leases, net of current portion                5,411            18

  Interest rate swaps                                   2,759         1,971

  Deferred revenue, net of current portion              9,808         9,788

  Customer security deposits, net of current

   portion                                                  9             9

                                                  -----------   -----------

  Total liabilities                                   304,785       305,701

                                                  -----------   -----------

Commitments and contingencies

Stockholders' Equity

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 June 30, 2011 and March 31, 2011,

 respectively. Liquidation preference $3,559            3,277         3,250

Class A common stock, $0.001 par value per share;

 75,000,000 shares authorized; 32,843,393 and

 32,320,287 shares issued and 32,791,953 and

 32,268,847 shares outstanding at June 30, 2011

 and March 31, 2010, respectively                          33            32

Class B common stock, $0.001 par value per share;

 15,000,000 shares authorized; 25,000 shares

 issued and outstanding, at June 30, 2011 and

 March 31, 2011, respectively                              --            --

  Additional paid-in capital                          197,129       196,420

  Treasury stock, at cost; 51,440 Class A shares         (172)         (172)

  Accumulated deficit                                (204,130)     (197,648)

  Accumulated other comprehensive loss                    (21)          (95)

                                                  -----------   -----------

Total stockholders' equity                             (3,884)        1,787

                                                  -----------   -----------

Total liabilities and stockholders' equity        $   300,901   $   307,488

                                                  ===========   ===========

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CONTACT

Maggie Begley

Maggie@mbcprinc.com

310-301-1785



Source: Cinedigm Digital Cinema

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