Attached files

file filename
8-K - 8-K - RealD Inc.a15-13624_18k.htm

Exhibit 99.1

 

 

 

 

RealD Inc. Reports Fourth Quarter and Fiscal Year 2015 Financial Results

 

 

LOS ANGELES (June 11, 2015) - RealD Inc. (NYSE: RLD), a leading global licensor of 3D and other visual technologies, today announced financial results for its fourth quarter and fiscal year ended March 31, 2015.

 

“Fiscal 2015 was an important year for RealD,” commented Michael V. Lewis, Chairman and Chief Executive Officer of RealD.  “We made progress stabilizing domestic 3D percentages, further reduced our operating expenses and capital expenditures and generated strong free cash flow.  As a result of our efforts, we believe we are well positioned to benefit from a strong 3D film slate in fiscal 2016.”

 

“As we continue to review our strategic alternatives, we remain focused on optimizing the performance of our worldwide cinema platform, investing in our key growth markets and maintaining an enhanced cost structure.  Through the execution of our strategic priorities, we will continue to drive the business forward for the benefit of all RealD stakeholders.”

 

Fourth Quarter Fiscal 2015 Financial Highlights

 

·     Total revenue was $27.9 million, comprised of license revenue of $20.4 million and product and other revenue of $7.5 million.  For the fourth quarter of fiscal 2014, total revenue was $40.6 million, comprised of license revenue of $28.6 million and product and other revenue of $12.0 million.

·     China license revenue represented 27% of total worldwide license revenue, up from 18% in the fourth quarter of fiscal 2014.

·     GAAP net loss attributable to common stockholders was $17.7 million, or $0.36 per share, compared to GAAP net loss attributable to common stockholders of $5.0 million, or $0.10 per diluted share, for the fourth quarter of fiscal 2014.

·     Adjusted EBITDA was $2.4 million, compared to $14.2 million in the fourth quarter of fiscal 2014.

·     Adjusted EBITDA is defined within the section of this press release entitled “Use of Non-U.S. GAAP Financial Measures,” which includes a reconciliation to its most comparable GAAP measure, net income (loss).

 

Fiscal 2015 Financial Highlights

 

·     Total revenue was $163.5 million, comprised of license revenue of $109.3 million and product and other revenue of $54.2 million.  For the year ended March 31, 2014, total revenue was $199.2 million, comprised of license revenue of $132.5 million and product and other revenue of $66.7 million.

·     China license revenue represented 17% of total worldwide license revenue, up from 12% in fiscal 2014.

·     GAAP net loss attributable to common stockholders was $23.8 million, or $0.48 per share, compared to GAAP net loss attributable to common stockholders of $11.4 million, or $0.23 per diluted share, for the year ended March 31, 2014.

·     Adjusted EBITDA was $52.0 million, compared to $65.1 million for the year ended March 31, 2014.

 

1



 

Cash Flows and Balance Sheet Highlights

 

·     For the year ended March 31, 2015, cash flows from operating activities were $51.8 million and total capital expenditures were $17.4 million, resulting in free cash flow of $34.4 million.

·     Free cash flow is defined within the section of this press release entitled “Use of Non-U.S. GAAP Financial Measures,” which includes a reconciliation to its most comparable GAAP measure, net cash provided by operating activities.

·     As of March 31, 2015, cash and cash equivalents were $60.3 million and total debt was $29.8 million.

 

Key Metrics

 

·     Estimated box office generated on RealD-enabled screens(1) for the fourth quarter of fiscal 2015 was $283 million ($129 million domestic, $154 million international).   In the fourth quarter of fiscal 2014, estimated box office generated on RealD-enabled screens was $499 million ($226 million domestic, $273 million international).

·     Five 3D films were released in the fourth quarter of fiscal 2015, compared to eight 3D films in the fourth quarter of fiscal 2014.  These figures reflect the number of 3D films released domestically during the respective periods.

·     International markets generated 69% of license revenue and 29% of product and other revenue in the fourth quarter of fiscal 2015.

·     As of March 31, 2015, RealD had deployed approximately 26,700 RealD-enabled screens, an increase of 6% from approximately 25,200 screens as of March 31, 2014, and an increase of 200 screens (200 international), or 1%, from approximately 26,500 screens as of December 31, 2014.

·     As of March 31, 2015, RealD had approximately 13,600 domestic screens at approximately 3,000 domestic theater locations and approximately 13,100 international screens at approximately 3,150 international theater locations.

 

(1)                      Estimated domestic box office on RealD-enabled screens represents the estimated 3D box office generated on RealD-enabled domestic screens.  Estimated international box office on RealD-enabled international screens is the estimated 3D box office generated on RealD-enabled international screens.  RealD’s estimates of box office on RealD-enabled screens rely on box office tracking data.  International box office reflects RealD’s estimates of international box office generated on RealD-enabled screens in 19 foreign countries where box office tracking is available.  RealD estimates these countries represent approximately 85% of RealD’s international license revenues.  The 19 foreign countries do not include China.

 

2



 

The following table shows the major domestically produced 3D motion pictures released or scheduled for release on domestic and/or international 3D-enabled screens for the fiscal year 2016 ending March 31, 2016.

 

(As of June 11, 2015)

 

 

 

 

 

 

Fiscal Q1 2016

 

Film

 

Domestic Release Date

(ending 6/30/15)

 

Avengers: Age of Ultron

 

5/1/2015

 

 

Mad Max: Fury Road

 

5/15/2015

 

 

Poltergeist

 

5/22/2015

 

 

San Andreas

 

5/29/2015

 

 

Jurassic World

 

6/12/2015

 

 

Inside Out

 

6/19/2015

 

 

 

 

 

Fiscal Q2 2016

 

Film

 

Domestic Release Date

(ending 9/30/15)

 

Terminator Genisys

 

7/1/2015

 

 

Minions

 

7/10/2015

 

 

Ant-Man

 

7/17/2015

 

 

Pixels

 

7/24/2015

 

 

Underdogs

 

8/14/2015

 

 

Everest

 

9/18/2015

 

 

Hotel Transylvania 2

 

9/25/2015

 

 

 

 

 

Fiscal Q3 2016

 

Film

 

Domestic Release Date

(ending 12/31/15)

 

The Walk

 

10/2/2015

 

 

Pan

 

10/9/2015

 

 

Goosebumps

 

10/16/2015

 

 

Paranormal Activity: The Ghost Dimension

 

10/23/2015

 

 

Peanuts

 

11/6/2015

 

 

Hunger Games: Mockingjay, Part 2

 

11/20/2015

 

 

The Martian

 

11/25/2015

 

 

The Good Dinosaur

 

11/25/2015

 

 

In the Heart of the Sea

 

12/11/2015

 

 

Star Wars: The Force Awakens

 

12/18/2015

 

 

Point Break

 

12/25/2015

 

 

 

 

 

Fiscal Q4 2016

 

Film

 

Domestic Release Date

(ending 3/31/16)

 

The Nut Job 2

 

1/15/2016

 

 

Kung Fu Panda 3

 

1/29/2016

 

 

The Finest Hours

 

1/29/2016

 

 

Zootopia

 

3/4/2016

 

 

Monster Trucks

 

3/18/2016

 

 

Batman v Superman: Dawn of Justice

 

3/25/2016

 

 

 

 

 

 

 

 

 

 

 

 

 

Sources: Rentrak and imdb.com.

 

3



 

Conference Call Information

 

Members of RealD’s management will host a conference call to discuss RealD’s financial results for the fourth quarter and fiscal year 2015, beginning at 4:30 pm ET (1:30 pm PT), today, June 11, 2015.  To access the call via telephone, interested parties should dial (855) 769-4820 (U.S.) or (407) 374-0083 (International) ten minutes prior to the start time and use conference ID 52448078.

 

The conference call will also be broadcast live over the Internet, hosted at the Investor Relations section of RealD’s website at www.reald.com.  An archived replay of the call will be available via webcast at www.reald.com or by dialing (855) 859-2056, or (404) 537-3406 for international callers. The conference ID for the telephone replay is 52448078.

 

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; statements regarding the extent and timing of future licensing, products and services, revenue levels and mix, expenses, margins, net income (loss) per diluted share, income taxes, tax benefits, acquisition costs and related amortization, and other measures of results of operations; our expectations regarding demand and acceptance for our technologies and our ability to successfully commercialize our technologies within a particular time frame, if at all; 3D motion picture releases and conversions scheduled for fiscal year 2016 ending March 31, 2016 and beyond, their commercial success and consumer preferences that, in recent periods, have trended in favor of 2D over 3D; our ability to increase the number of RealD-enabled screens in domestic and international markets and market share; our ability to supply our products to our customers on a timely basis; our relationships with exhibitor and studio partners and the business model for 3D eyewear in North America; any discussion regarding strategic alternatives; the progress, timing and amount of expenses associated with our research and development activities; market and industry growth opportunities and trends in the markets in which we operate, including in 3D content; our plans, strategies and expected opportunities, including the development and evaluation of any potential strategic alternatives; the deployment of and demand for our products and products incorporating our technologies; competitive pressures in domestic and international cinema markets impacting licensing and product revenues; and our ability to execute and achieve anticipated savings or other benefits from our cost reduction efforts

 

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.  RealD’s Annual Report on Form 10-K for the fiscal year ended March 31, 2015 and other documents filed with the SEC include a more detailed discussion of the risks and uncertainties that may 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.

 

4



 

Use of Non-U.S. GAAP Financial Measures

 

To supplement our financial statements presented on a GAAP basis, we provide Adjusted EBITDA and free cash flow as supplemental measures of our performance.   We define Adjusted EBITDA as net income (loss) plus expenses for interest, income taxes, depreciation, amortization, impairment and stock-based compensation plus net foreign exchange loss (gain) plus expenses comprising the non-U.S. GAAP categories “restructuring charges, severance costs and reserves” and “non-recurring expenses” as defined in our Credit Agreement.  We define free cash flow as total cash provided (used) by operating activities less cash used in purchases of property and equipment and cash used in purchases of cinema systems and related components.

 

We present Adjusted EBITDA in reporting our financial results to provide investors with additional tools to evaluate our operating results in a manner that focuses on what our management believes to be our ongoing business operations.  We present free cash flow to provide investors a metric for our capacity to generate cash from our operating and investing activities to sustain our operating activities.  Management does not itself, nor does it suggest that investors should, consider any such non-U.S. GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.  Adjusted EBITDA and free cash flow are 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; and in communications with its Board of Directors concerning financial performance. Because not all companies use identical calculations, our presentation of Adjusted EBITDA and free cash flow may not be comparable to similarly titled measures of other companies.  Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as tax and debt service payments.

 

About RealD Inc.

 

RealD is a leading global licensor of 3D and other visual technologies.  RealD’s extensive intellectual property portfolio is used in applications that enable a premium viewing experience in the theater, the home and elsewhere.  RealD’s core business is the licensing of RealD Cinema Systems and the product sale of RealD eyewear to motion picture exhibitors to enable a premium viewing experience for 3D motion pictures and alternative 3D content in the theater.

 

RealD was founded in 2003 and has offices in Beverly Hills, California; Boulder, Colorado; London, United Kingdom; Moscow, Russia; Shanghai, China; Hong Kong; Tokyo, Japan; and Rio de Janeiro, Brazil.  For more information, please visit our website at www.reald.com.

 

© 2015 RealD Inc.  All Rights Reserved.

 

Investor Contact:

Andrew Greenebaum / Laura Bainbridge

310-829-5400

investors@reald.com

 

Media Contact:

Will Hammond

424-702-4758

whammond@reald.com

 

5



 

RealD Inc.

 

Condensed Consolidated Statements of Operations

 

(In thousands, except per share data)

 

 

 

 

Three months ended

 

Year ended

 

 

 

March 31,
2015

 

March 31,
2014

 

March 31,
2015

 

March 31,
2014

 

Revenue:

 

 

 

 

 

 

 

 

 

License

 

$

20,356

 

$

28,611

 

$

109,317

 

$

132,512

 

Product and other

 

7,549

 

12,037

 

54,146

 

66,722

 

Total revenue

 

27,905

 

40,648

 

163,463

 

199,234

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

License

 

13,474

 

11,383

 

47,086

 

45,364

 

Product and other

 

4,189

 

9,363

 

35,599

 

58,611

 

Total cost of revenue

 

17,663

 

20,746

 

82,685

 

103,975

 

Gross profit

 

10,242

 

19,902

 

80,778

 

95,259

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

4,782

 

4,220

 

19,474

 

19,685

 

Selling and marketing

 

6,226

 

6,842

 

21,719

 

27,137

 

General and administrative

 

13,566

 

11,063

 

49,370

 

50,596

 

Total operating expenses

 

24,574

 

22,125

 

90,563

 

97,418

 

Operating loss

 

(14,332)

 

(2,223)

 

(9,785)

 

(2,159)

 

Interest expense, net

 

(356)

 

(490)

 

(1,634)

 

(2,255)

 

Other loss

 

(155)

 

(906)

 

(4,419)

 

(679)

 

Loss before income taxes

 

(14,843)

 

(3,619)

 

(15,838)

 

(5,093)

 

Income tax expense

 

2,792

 

1,236

 

7,909

 

6,117

 

Net loss

 

(17,635)

 

(4,855)

 

(23,747)

 

(11,210)

 

Net income attributable to noncontrolling interest

 

(75)

 

(95)

 

(75)

 

(196)

 

Net loss attributable to RealD Inc. common stockholders

 

$

(17,710)

 

$

(4,950)

 

$

(23,822)

 

$

(11,406)

 

Loss per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.36)

 

$

(0.10)

 

$

(0.48)

 

$

(0.23)

 

Diluted

 

$

(0.36)

 

$

(0.10)

 

$

(0.48)

 

$

(0.23)

 

Shares used in computing earnings per common share:

 

 

 

 

 

 

 

 

 

Basic

 

49,864

 

49,474

 

50,042

 

49,504

 

Diluted

 

49,864

 

49,474

 

50,042

 

49,504

 

 

6



 

RealD Inc.

 

Condensed Consolidated Balance Sheets

 

(In thousands)

 

 

 

March 31,
2015

 

March 31,
2014

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

60,333

 

$

28,800

 

Accounts receivable, net

 

26,748

 

48,422

 

Inventories

 

8,305

 

9,109

 

Deferred costs—eyewear

 

80

 

149

 

Prepaid expenses and other current assets

 

4,770

 

5,197

 

Total current assets

 

100,236

 

91,677

 

Property and equipment, net

 

20,599

 

22,491

 

Cinema systems, net

 

82,243

 

106,735

 

Digital projectors, net-held for sale

 

 

57

 

Goodwill

 

10,657

 

10,657

 

Other intangibles, net

 

4,817

 

6,154

 

Deferred income taxes

 

2,461

 

4,571

 

Other assets

 

8,631

 

4,840

 

Total assets

 

$

229,644

 

$

247,182

 

Liabilities and equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

9,652

 

$

12,470

 

Accrued expenses and other liabilities

 

26,640

 

21,896

 

Deferred revenue

 

5,009

 

8,143

 

Income taxes payable

 

1,619

 

1,790

 

Deferred income taxes

 

2,583

 

4,288

 

Current portion of Credit Agreement

 

7,460

 

12,500

 

Total current liabilities

 

52,963

 

61,087

 

Credit Agreement, net of current portion

 

22,380

 

23,750

 

Deferred revenue, net of current portion

 

3,931

 

6,465

 

Other long-term liabilities, customer deposits and virtual print fee liability

 

4,027

 

5,046

 

Total liabilities

 

83,301

 

96,348

 

Commitments and contingencies

 

 

 

 

 

Equity

 

 

 

 

 

Common stock

 

371,689

 

352,913

 

Accumulated deficit

 

(226,803)

 

(201,763)

 

Accumulated other comprehensive income

 

1,960

 

262

 

Total RealD Inc. stockholders’ equity

 

146,846

 

151,412

 

Noncontrolling interest

 

(503)

 

(578)

 

Total equity

 

146,343

 

150,834

 

Total liabilities and equity

 

$

229,644

 

$

247,182

 

 

7



 

RealD Inc.

 

Condensed Consolidated Statements of Cash Flows

 

(In thousands)

 

 

 

Year ended

 

 

 

March 31,
2015

 

March 31,
2014

 

Cash flows from operating activities

 

 

 

 

 

Net loss

 

$

(23,747)

 

$

(11,210)

 

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

39,999

 

40,300

 

Deferred income tax

 

405

 

(142)

 

Non-cash interest expense

 

119

 

529

 

Non-cash stock compensation

 

14,898

 

17,741

 

Non-cash bad debt expense

 

638

 

609

 

(Gain) Loss on disposal of property and equipment

 

(8)

 

307

 

Impairment of long-lived assets

 

5,023

 

4,522

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

21,036

 

(3,559)

 

Inventories

 

804

 

6,321

 

Prepaid expenses and other current assets

 

689

 

(1,611)

 

Deferred costs—eyewear

 

69

 

389

 

Other assets

 

(3,015)

 

191

 

Accounts payable

 

(2,768)

 

(10,308)

 

Accrued expenses and other liabilities

 

4,744

 

(3,646)

 

Other long-term liabilities, customer deposits and virtual print fee liability

 

(1,019)

 

(610)

 

Income taxes receivable/payable

 

(433)

 

1,574

 

Deferred revenue

 

(5,587)

 

(5,697)

 

Net cash provided by operating activities

 

51,847

 

35,700

 

Cash flows from investing activities

 

 

 

 

 

Purchases of property and equipment

 

(4,359)

 

(4,285)

 

Purchases of cinema systems and related components

 

(13,071)

 

(18,050)

 

Purchases of intangible assets

 

 

 

Proceeds from sale of fixed assets

 

63

 

551

 

Net cash used in investing activities

 

(17,367)

 

(21,784)

 

Cash flows from financing activities

 

 

 

 

 

Payments of debt issuance costs

 

(895)

 

 

Proceeds from credit facility

 

37,300

 

37,500

 

Repayments on credit facility

 

(43,710)

 

(48,750)

 

Proceeds from exercise of stock options

 

3,587

 

2,003

 

Proceeds from issuance of common stock pursuant to employee stock purchase plan

 

291

 

475

 

Repayments on tax withholding of restricted stock units

 

(1,218)

 

 

Purchases of treasury stock

 

 

(7,511)

 

Net cash used in financing activities

 

(4,645)

 

(16,283)

 

Effect of currency exchange rate changes on cash and cash equivalents

 

1,698

 

147

 

Net increase (decrease) in cash and cash equivalents

 

31,533

 

(2,220)

 

Cash and cash equivalents, beginning of year

 

28,800

 

31,020

 

Cash and cash equivalents, end of year

 

$

60,333

 

$

28,800

 

Supplemental disclosures of cash flow information

 

 

 

 

 

Cash payments for income taxes

 

4,308

 

872

 

Cash payments for interest expense

 

$

1,515

 

$

1,726

 

 

8



 

RealD Inc.

 

Schedule of Non-GAAP Reconciliations

 

(In thousands)

 

 

Reconciliation of Adjusted EBITDA to Net Income (Loss)

 

 

 

 

Three months ended

 

Year ended

 

 

 

March 31,
2015

 

March 31,
2014

 

March 31,
2015

 

March 31,
2014

 

Net loss

 

$

(17,635)

 

$

(4,855)

 

$

(23,747)

 

$

(11,210)

 

Add (deduct):

 

 

 

 

 

 

 

 

 

Interest expense, net

 

356

 

490

 

1,634

 

2,255

 

Income tax expense

 

2,792

 

1,236

 

7,909

 

6,117

 

Depreciation and amortization

 

10,074

 

10,218

 

39,999

 

40,300

 

Other loss (1)

 

155

 

906

 

4,419

 

679

 

Share-based compensation expense (2)

 

3,383

 

4,136

 

14,898

 

17,741

 

Impairment of assets and intangibles (3)

 

2,287

 

975

 

5,023

 

4,522

 

Cost reduction plan (4)

 

463

 

1,061

 

1,373

 

4,718

 

Nonrecurring expense (5)

 

526

 

 

526

 

 

Adjusted EBITDA (6)

 

$

2,401

 

$

14,167

 

$

52,034

 

$

65,122

 

 

 

(1)         Consists of gains and losses from foreign currency exchange and foreign currency forward contracts.

(2)         Represents share-based compensation expense of nonstatutory and incentive stock options, restricted stock units and performance stock units, and employee stock purchase plan to employees, non-employees, officers and directors.

(3)         Represents impairment of long-lived assets, such as fixed assets, theatrical equipment and related purchase commitments and identifiable intangibles.

(4)         Expenses under our Credit Agreement for the non-U.S. GAAP category “restructuring charges, severance costs and reserves.”

(5)         Expenses under our Credit Agreement for the non-U.S. GAAP category “non-recurring costs and expenses”. In fiscal year ended March 31, 2015, these expenses represent advisory fees related to our strategic alternatives process.

(6)         Adjusted EBITDA is not a recognized measurement under U.S. GAAP. For a definition of Adjusted EBITDA and reconciliation to net income (loss), the comparable U.S. GAAP item, see “Use of Non-GAAP Financial Measures.”

 

 

 

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

 

 

 

 

Year ended

 

 

 

March 31,
2015

 

March 31,
2014

 

Net cash provided by operating activities

 

$

51,847

 

$

35,700

 

Purchases of property and equipment

 

(4,359)

 

(4,285)

 

Purchases of cinema systems and related components

 

(13,071)

 

(18,050)

 

Free cash flow

 

$

34,417

 

$

13,365

 

 

9